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If you were asked to prepare an appraisal to determine the insurable replacement cost new and assuming the policy does not call for any exclusions, which of the following costs would not be applicable?

a) Cost of machine
b) Motors and controls
c) Finance charges
d) Foundations
e) Millwrighting
f) Freight
g) Installation labor
h) Run in or debugging

1 Answer

3 votes

Final answer:

The cost not applicable in the insurable replacement cost new would be finance charges, as they relate to borrowing money rather than directly replacing the asset.

Step-by-step explanation:

If a student were asked to prepare an appraisal to determine the insurable replacement cost new and the policy does not call for any exclusions, the only cost that would not be applicable is finance charges. The costs related to the actual physical replacement of an asset, such as the cost of the machine (a), motors and controls (b), foundations (d), millwrighting (e), freight (f), installation labor (g), and run in or debugging (h), are all typically included in calculating the replacement cost new for insurance purposes. However, finance charges are considered a cost associated with borrowing money rather than a direct cost of replacing the insured asset.

User Amrit Giri
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