What is the difference between replacement value and actual value for personal property insurance?

Question

Quizplus · Accepted Answer

Replacement value is typically the current retail cost to replace the item, whereas actual value takes into account depreciation and may be lower than the replacement value. Therefore, choosing replacement value coverage would ensure that the policyholder can replace their lost or damaged personal property with a new item, while actual value coverage may not fully cover the cost of replacement. Choice A is incorrect because it is the definition of actual value, not replacement value. Choice B is incorrect because the amount received from selling an item at a garage sale is not relevant to insurance coverage. Choice D is incorrect because, as mentioned above, actual value is typically less than replacement value.

What Is the Difference Between Replacement Value and Actual Value