Which statement about supplementary payments is TRUE?

Which statement about supplementary payments is TRUE?

• A. They reduce the policy limit
• B. They are paid only for defense costs
• C. They are paid in addition to the limit of insurance
• D. They are paid only after the deductible is met

Answer: (C)

Supplementary payments are funds the insurer pays on top of the policy’s liability limit. They cover defense costs, court costs, and interest, and they do not reduce the limit available for judgments or settlements. That’s why the statement that they are paid in addition to the limit is true. They’re not limited to defense costs only, and deductibles typically don’t apply to these payments, so the other options don’t fit.

Supplementary payments are funds the insurer pays on top of the policy’s liability limit. They cover defense costs, court costs, and interest, and they do not reduce the limit available for judgments or settlements. That’s why the statement that they are paid in addition to the limit is true. They’re not limited to defense costs only, and deductibles typically don’t apply to these payments, so the other options don’t fit.