Question

The DP-2 and DP-3 forms provide replacement cost coverage if the amount of insurance carried is equal to what percentage of the ACV?

A) 50%
B) 75%
C) 80%
D) 90%

Answer 1

The DP-2 and DP-3 forms provide replacement cost coverage if the amount of insurance carried is equal to 80% of the ACV.

Step-by-step explanation:

The DP-2 and DP-3 forms provide replacement cost coverage if the amount of insurance carried is equal to 80% of the Actual Cash Value (ACV).

Coinsurance is a concept in insurance where the policyholder pays a percentage of a loss, and the insurance company pays the remaining cost. In this case, if the policyholder carries insurance that is at least 80% of the ACV, they will receive replacement cost coverage instead of actual cash value coverage.

For example, if a building's ACV is $100,000 and the policyholder carries insurance for at least $80,000 (80% of the ACV), then they would be eligible for replacement cost coverage in case of a loss.