Collin insures his building for $250,000.At the time of its total loss, the property is valued at $220,000.Under:
A)an open policy, Collin would recover $220,000.
B)an open policy, Collin would recover $250,000.
C)a valued policy, Collin would recover $220,000.
D)Both (a) and (c).
E)Both (b) and (c).

Question

Quizplus · Accepted Answer

In an open policy, the insured is only entitled to the actual cash value (ACV) of the property at the time of loss, which in this case is $220,000. This is because the policy is not based on a specific value, but rather on the actual value of the property at the time of loss.
In a valued policy, the insured is entitled to the full amount of the policy limit, regardless of the actual value of the property at the time of loss. However, this type of policy is rare and typically only used for specific high-value items such as fine art or jewelry.

Collin Insures His Building for $250,000