The disadvantage of actual cash value coverage of personal property compared to replacement cost coverage is that it
A)will reimburse you for replacement cost minus estimated depreciation.
B)will reimburse you for the cash value of a new item.
C)must be reported as a loss on your tax return.
D)does not have to be reported as a loss on your tax return.
E)none of the above.

Question

Quizplus · Accepted Answer

Actual cash value coverage only reimburses the depreciated value of the item, whereas replacement cost coverage will reimburse the full cost of replacing the item with a new one. This means with actual cash value coverage, you may not receive enough reimbursement to fully replace the item.

The Disadvantage of Actual Cash Value Coverage of Personal Property