Question

Which term describes the cost to replace property minus the deduction for depreciation?

a) Stated value

b) Actual cash value

c) Fair market value

d) Replacement cost

Answer 1

The correct answer is b) Actual cash value.

Step-by-step explanation:

Insurance industry’s ACV is define as "the cost to replace with new property of like kind and quality, less depreciation. Courts have varied in their rulings as to whether or not depreciation includes obsolescence (loss of usefulness as a result of outmoded design, construction, etc.)."