Which of the following best describes a loss settlement provision?

A loss settlement provision essentially outlines how an insurance policy responds to a covered loss and details the method by which the insurer will reimburse the policyholder for damages incurred. It defines the rules and procedures for settling claims and can include how the amount payable will be determined after loss occurs.

The correct answer states that a loss settlement provision requires continuous property insurance. This is significant because it highlights the importance of maintaining coverage to ensure that any potential losses can be adequately settled. Continuous insurance protects the property consistently, allowing for the loss settlement provision to take effect when needed. Disruptions or gaps in coverage could lead to complications in settling loss claims, thus reinforcing the necessity for ongoing insurance.

Other options do not accurately capture the essence of a loss settlement provision. The formula to calculate depreciation is more related to the valuation of property rather than to how loss claims are settled. A method for determining salvage value pertains to the value of property that can be recovered after loss, while a statement of policy benefits describes general coverage but doesn't specifically relate to the settlement process for losses.