Question

Under the Dwelling Broad Form, losses to a building are paid on a(n) ____ basis.

1) Actual cash value
2) Replacement cost
3) Market value
4) Agreed value

Answer 1

Losses under the Dwelling Broad Form are paid on a replacement cost basis, which covers the cost of repairing or replacing the structure without depreciation.

Step-by-step explanation:

Under the Dwelling Broad Form, losses to a building are paid on a replacement cost basis. This means that in the event of a covered loss, the insurance policy will pay the cost of repairing or replacing damaged parts of the building with materials of like kind and quality, without a deduction for depreciation.

It is important to note that to get the full replacement cost, the policyholder usually must actually repair or replace the damaged property.