West Virginia Adjusters Practice Exam

Nancy's home was completely destroyed by a fire. Which of the following statements is TRUE?

1. She will only receive the depreciated value of the home

2. She cannot receive indemnification because the cause of the fire is unknown

3. She will receive only the actual cash value of the property

4. According to the Valued Policy Law, Nancy can be indemnified for the full limit of coverage, even though she can rebuild for less

The correct answer is: She will only receive the depreciated value of the home

Nancy's home was completely destroyed by a fire, meaning that the cost to repair it is likely going to exceed the current value of the home. Option A is the only correct statement because it correctly reflects the principle of depreciation, which considers the age and condition of the property when determining the amount of compensation a policyholder will receive. Option B is incorrect, as the cause of the fire does not determine Nancy's eligibility for indemnification. Additionally, Option C is incorrect because it does not take into account the potential cost of rebuilding. Option D is also incorrect because it refers to the Valued Policy Law, which does not apply to this situation.