Georgia Property & Casualty Practice Exam

How much will Gertrude recover for her stolen television using the actual cash value loss valuation method?

1. $1,200 less deductible

2. $600 less deductible

3. $800 less deductible

4. salvage value

The correct answer is: $600 less deductible

Using the actual cash value (ACV) method for loss valuation determines recovery based on the replacement cost of the item minus depreciation. If Gertrude's television was stolen, the actual cash value would reflect its current market value at the time it was stolen, taking into account factors such as age, condition, and depreciation. In this case, Gertrude's television, being valued at $600, indicates that this amount is likely the pre-loss market value minus any depreciation. Therefore, when she files a claim for the stolen television, she can expect to recover this amount, adjusted for any deductible specified in her policy. If the choice states $600 less deductible, it supports the idea that the valuation is considering depreciation, aligning with the principles of actual cash value. Hence, this amount is what Gertrude would realistically recover for her loss.