Under DP-3, how is personal property valued?

Under DP-3, how is personal property valued?

• A. Replacement cost
• B. Actual cash value
• C. Market value
• D. Stated value

Answer: (B)

The amount you get for personal property under DP-3 is based on actual cash value. This means when a loss occurs, the insurer pays the replacement cost of the item minus depreciation for age and wear. The dwelling and other structures may be covered at replacement cost, but the contents are typically valued this way unless you add a separate endorsement that changes the valuation for personal property. For example, a five-year-old television that would cost $1,000 to replace today might be worth only $400–$600 in ACV after depreciation, and that is the amount paid. If you want replacement cost for personal property, you’d need the appropriate endorsement. The other valuation methods—replacement cost for contents without endorsement, market value, or stated value—don’t fit the standard DP-3 approach to valuing personal property.

The amount you get for personal property under DP-3 is based on actual cash value. This means when a loss occurs, the insurer pays the replacement cost of the item minus depreciation for age and wear. The dwelling and other structures may be covered at replacement cost, but the contents are typically valued this way unless you add a separate endorsement that changes the valuation for personal property. For example, a five-year-old television that would cost $1,000 to replace today might be worth only $400–$600 in ACV after depreciation, and that is the amount paid. If you want replacement cost for personal property, you’d need the appropriate endorsement. The other valuation methods—replacement cost for contents without endorsement, market value, or stated value—don’t fit the standard DP-3 approach to valuing personal property.