Alabama Insurance Adjuster Practice Exam

How much will Kevin's insurer pay him for the damaged sofa and loveseat?

1. $1,500

2. $1,900

3. $1,200

4. $1,700

The correct answer is: $1,900

To determine the amount Kevin's insurer will pay for the damaged sofa and loveseat, it's important to consider the actual cash value (ACV) or replacement cost provided for each item. The precise amount an insurance company would cover typically includes factors such as the purchase price, the age of the items, their condition at the time of the loss, and any depreciation that may apply. In this scenario, if the answer indicates that Kevin's insurer will pay him $1,900, this suggests that the valuation process likely concluded that this amount represents either the replacement cost or the ACV after considering depreciation. This means the insurer has assessed the items and deemed that cost appropriate based on the underwriting guidelines and terms of Kevin's policy. The specific calculation leading to the $1,900 payout could be based on an assessment indicating that both the sofa and loveseat together are worth that amount after taking into account factors like their age and condition at the time of the loss. Understanding how insurance policies calculate payouts is crucial for policyholders, as it demonstrates the importance of maintaining accurate records of personal property and being aware of the limits and definitions established in their insurance agreements.