Question

Under the Basic Dwelling Form, losses are paid on a(n) ____ basis?

1) Actual Cash Value
2) Replacement Cost
3) Agreed Value
4) Market Value

Answer 1

Under the Basic Dwelling Form, losses are paid on an Actual Cash Value basis, which factors in depreciation when determining the payout for a covered loss.The correct answer is option 1.

Step-by-step explanation:

Under the Basic Dwelling Form, losses are typically paid on an Actual Cash Value basis.

This means that when a covered peril causes damage to the property, the insurance will pay out the cost of repair or replacement minus any depreciation.

The Actual Cash Value is determined by subtracting the depreciation from the replacement cost at the time of loss.

This is in contrast to a Replacement Cost policy, which would pay for the full cost of repair or replacement without deduction for depreciation.The correct answer is option 1.