North Carolina Adjuster Practice Exam

What amount can Roxanne expect to receive for her damaged TV with a replacement cost endorsement?

1. $800

2. $1,000

3. $1,200

4. $1,400

The correct answer is: $1,200

When Roxanne holds a replacement cost endorsement on her insurance policy, this means that in the event of a covered loss, her insurer will compensate her for the actual cost of replacing her damaged property without deducting for depreciation. In this scenario, the amount Roxanne can expect to receive for her damaged TV is determined by the current costs associated with purchasing a similar model, which in this case totals $1,200. The endorsement ensures that she is compensated for the full replacement cost, allowing her to replace the broken television with a new one of like kind and quality, rather than just receiving a payout based on the TV's depreciated value. Furthermore, the other amounts presented (such as $800, $1,000, and $1,400) may not reflect the actual costs of replacing the television or may be based on an incorrect assessment of the situation. However, since Roxanne's claim should relate directly to the current market value of a replacement, $1,200 is the correct and justified amount she can expect to receive from her insurer.