Which endorsement allows settling losses to most personal property on a replacement cost basis rather than actual cash value?

Which endorsement allows settling losses to most personal property on a replacement cost basis rather than actual cash value?

• A. Watercraft endorsement
• B. Personal Property Replacement Cost Loss Settlement (HO 04 90)
• C. Earthquakes endorsement
• D. Identity Fraud endorsement

Answer: (B)

This question is about how losses to personal property can be paid. Normally, personal-property claims under a homeowners policy are paid on an actual cash value basis, which means depreciation is subtracted. The Personal Property Replacement Cost Loss Settlement endorsement (HO 04 90) changes that by providing replacement cost coverage for many personal belongings. With this endorsement, covered items are settled at their replacement cost—essentially what it would cost to buy a new item of like kind and quality at current prices—rather than their depreciated value, subject to policy limits and any applicable conditions. So, this endorsement is the one that allows most personal property losses to be settled on a replacement cost basis. The other options relate to different coverages (watercraft, earthquakes, or identity fraud) and do not alter the settlement method for personal property.

This question is about how losses to personal property can be paid. Normally, personal-property claims under a homeowners policy are paid on an actual cash value basis, which means depreciation is subtracted. The Personal Property Replacement Cost Loss Settlement endorsement (HO 04 90) changes that by providing replacement cost coverage for many personal belongings. With this endorsement, covered items are settled at their replacement cost—essentially what it would cost to buy a new item of like kind and quality at current prices—rather than their depreciated value, subject to policy limits and any applicable conditions.

So, this endorsement is the one that allows most personal property losses to be settled on a replacement cost basis. The other options relate to different coverages (watercraft, earthquakes, or identity fraud) and do not alter the settlement method for personal property.