Property Insurance FundamentalsQuestion 203 of 474
Actual cash value (ACV) of personal property is calculated as:
a.Replacement cost with no adjustment
b.Replacement cost minus depreciation
c.The original price the insured paid
d.The total premiums paid on the policy
Explanation
Actual cash value equals the current cost to replace the item minus depreciation for age, wear, and condition. It reflects what the used property is actually worth at the time of loss. Replacement cost coverage, by contrast, pays to replace the item with a new one of like kind and quality without deducting depreciation, subject to policy conditions, and is a valuable option for personal property.
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