If an insured has actual cash value coverage, how much would he collect given the following facts?
1) Replacement cost of the building is $200,000,
2) Replacement cost of the loss is $30,000,
3) Estimated total useful life is 30 years, and
4) Building has been in use 15 years.
A) $70,000
B) $45,000
C) $30,000
D) $15,000

Question

If an insured has actual cash value coverage, how much would he collect given the following facts?
1)	Replacement cost of the building is $200,000,
2)	Replacement cost of the loss is $30,000,
3)	Estimated total useful life is 30 years, and
4)	Building has been in use 15 years.
A) $70,000
B) $45,000
C) $30,000
D) $15,000

Quizplus · Accepted Answer

The actual cash value is calculated by subtracting depreciation from the replacement cost of the loss. Given the building's useful life is 30 years and it has been in use for 15 years, it has depreciated by 50%. Therefore, the actual cash value of the $30,000 loss would be $30,000 - ($30,000 * 50%) = $15,000.

If an Insured Has Actual Cash Value Coverage, How Much