California Insurance Code section 2051 generally defines the measure of indemnity for a partial loss to property as which of the following?
a.The original purchase price the insured paid for the item when it was new
b.Actual cash value (ACV), determined as the amount it would cost to repair or replace, less a fair and reasonable deduction for physical depreciation
c.The full replacement cost of repairing or replacing with new materials of like kind and quality, with no deduction of any kind for physical depreciation, age or condition
d.Sentimental value or market resale value, whichever of the two 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)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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