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Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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An insured is purchasing a Building and Personal Property Coverage Form (BPP) to cover her business. She asks the agent to explain how her property will be valued in the event of a loss. Which one of the following statements made by her agent accurately describes how the covered property will be valued in the event of loss?
   
The insurer is obligated to pay replacement cost regardless of whether or not the property has actually been repaired or replaced.
   
The insurer is obligated to pay the cost to replace the damaged or destroyed property with new property of like kind and quality without any deduction for depreciation or obsolescence.
   
Insurers underwrite the coverage carefully because some items that can be difficult to value, such as manuscripts, works of art, antiques, and rare articles, are covered for replacement cost.
   
If the insured elects to accept an ACV claim settlement, the insured is barred from later requesting payment of replacement cost.
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