Davis purchased a brand-new television in six years ago for $1,200. This year, a fire occurred in his house and damaged his television. If Davis' property is insured for replacement value, what will he likely receive?

Question

Business

Ulises Singleton

21 October, 08:59

Davis purchased a brand-new television in six years ago for $1,200. This year, a fire occurred in his house and damaged his television. If Davis' property is insured for replacement value, what will he likely receive?

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Answers (1)

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Liana Stokes · Answer 1

Answer: The correct answer is the current cost of the television.

Explanation: When insurance coverage is for replacement value it means that if the insured suffers a loss they will receive the cost to replace the item. In this case, the television was $1,200 when he purchased it six years ago. If the same television is $2,000 to replace it, then he will receive the $2,000, not the $1,200 that he originally paid for it.