Which statement best describes the insurer's promise when a premium is paid?

• A. Handle claims in good faith.
• B. Investigate all claims regardless of cost.
• C. Pay all claims without regard to policy terms.
• D. Offer refunds on premiums.

Answer: (A)

When you pay the premium and the policy is in force, the insurer's obligation is to handle claims in good faith and with fair dealing. This means evaluating and settling claims honestly, promptly, and in accordance with the policy terms, including any exclusions, limits, and conditions. The insurer should explain coverage clearly, investigate claims that are reasonable and proportional to the loss, and pay only what the policy covers. It does not promise to investigate every claim at unlimited cost, pay claims outside the policy terms, or refund premiums as a routine promise.