Washington State Insurance Practice Exam

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Prepare for the Washington State Insurance Exam. This unique quiz offers multiple choice questions, detailed hints, and explanations designed to ensure a thorough understanding of insurance principles and practices. Gain confidence for your upcoming exam!

Each practice test/flash card set has 50 randomly selected questions from a bank of over 500. You'll get a new set of questions each time!

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Which loss valuation method involves replacing damaged property with less expensive and more modern construction or equipment?

Actual Cash Value
Functional Replacement Cost
Market Value
Replacement Cost

The correct answer is: Functional Replacement Cost

Functional Replacement Cost involves replacing damaged property with less expensive and more modern construction or equipment. This method takes into consideration the cost of replacing the damaged property with items that are functionally equivalent to the original property, but possibly more cost-effective and modern. Actual Cash Value (ACV) is the cost to replace damaged property minus depreciation, Market Value is the price at which property would sell in a competitive market, and Replacement Cost is the cost to replace damaged property with like kind and quality without considering depreciation.