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Your home insurance settles claims using the replacement value method for personal property losses. A microwave is stolen. Two years ago, it cost $170 and had an expected life of 7 years. A comparable microwave costs $320 today. What amount will the insurance company pay?

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NickMagnus

Answer:

$320

Explanation:

Most of the home insurance policy terms and limits should claim payments for property losses based on the actual cash value.

There is no depreciation on replacement costs in home insurance policies. The depreciation is calculated on the actual cash value of a comparable microwave.

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