A California homeowner suffers a fire loss to a 15-year-old roof. The policy provides Actual Cash Value coverage. Under §2051 the insurer will pay:
a.A pre-agreed stated amount regardless of actual repair cost
b.Original purchase price of the roof, without any deduction
c.Replacement cost at the time of loss minus depreciation for age and wear
d.Replacement cost in full, with depreciation paid only after rebuild
Explanation
Cal. Ins. Code §2051 defines Actual Cash Value (ACV) for most California property losses as the replacement cost at the time of loss minus depreciation. A 15-year-old roof is paid at its depreciated value, not at the new-roof cost. Replacement Cost with a depreciation holdback is a separate, optional coverage (§2051.5).
Law Reference: Cal. Ins. Code §2051 (ACV)This topic, taught in full in the California Property & Casualty Broker-Agent guide. California Property & Casualty Broker-Agent Study Guide — 2026 Edition — PDF + EPUB, $24.99 · 14-day refund →
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