In case of total loss of insured property by fire, the fire insurance policy must be held and considered to be a what against the company for the full amount?

• A. Liquidated Demand
• B. Unliquidated claim
• C. Liability release
• D. Subrogation

Answer: (A)

In a total loss situation, the insurer’s obligation to the insured is a fixed, definite sum—the amount owed under the policy. Because this amount is certain, the insured has a liquidated demand against the company for the full payment. An unliquidated claim would involve an uncertain or disputed amount, which isn’t the case when the loss is total and the policy specifies the payable sum. Subrogation refers to the insurer’s right to recover paid funds from a third party after payment, not the nature of the claim against the insurer itself. A liability release isn’t the right concept here, since the obligation is to pay the full amount owed, not to release liability.