Which of the following statements describes how losses will be settled if a property insurance policy is written on a replacement cost basis?

Which of the following statements describes how losses will be settled if a property insurance policy is written on a replacement cost basis?



A) Losses are settled without the applicable deductible.
B) Losses are settled without a deduction for depreciation.
C) The insurer must replace the damaged or destroyed property in lieu of a cash settlement.
D) The policy is converted to a valued policy.


Answer: B) Losses are settled without a deduction for depreciation.

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