Property Insurance FundamentalsQuestion 184 of 215
California Insurance Code section 2051 generally defines the measure of indemnity for a partial loss to property as which of the following?
a.Actual cash value (ACV), determined as the amount it would cost to repair or replace, less a fair and reasonable deduction for physical depreciation
b.Replacement cost without any depreciation deduction
c.The original purchase price the insured paid for the item
d.Sentimental or market resale value, whichever is greater
Explanation
California Insurance Code section 2051 sets the standard measure for indemnity as actual cash value, defined essentially as the cost to repair or replace the property less a fair and reasonable deduction for physical depreciation. Replacement cost coverage, which waives the depreciation deduction, must be expressly added by endorsement or policy form.
Law Reference: Cal. Ins. Code §2051 (Actual Cash Value)Practice all 215 questions free — no signup required.
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