If you wanted to insure your brand new Ferrari sports car to ensure that if anything happened to it you could replace it, which of the following methods of valuing an item would be the most useful?

Question

Quizplus · Accepted Answer

Replacement cost new would be the most useful method of valuing the Ferrari because it would take into account the current market value of a brand new Ferrari, which would be the value needed to replace the car in case of damage or loss. Option A (Cost) would only take into account the original cost of the car, which may not accurately reflect its current value, while option B (Replacement cost) may not reflect the true cost of a brand new Ferrari. Option D (Net realizable value) is not applicable as it is used for valuing assets that can be sold, but a brand new Ferrari would not be sold in case of damage or loss.

If You Wanted to Insure Your Brand New Ferrari Sports