Other Than Life (OTL) Practice Exam

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Prepare for the Other Than Life (OTL) Exam with flashcards and multiple choice questions. Each comes with hints and explanations to guide your study. Ace your test!

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How is Actual Cash Value of an article best defined?

Market value
Replacement value
Salvage value
Fair value

The correct answer is: Market value

Actual Cash Value (ACV) is best understood as the market value of an article at a specific point in time, commonly regarded as the amount an item would sell for in the open market. This takes into account depreciation and is typically defined as the cost to replace the item minus depreciation for age and condition. Market value provides a realistic financial figure based on what a willing buyer would pay to a willing seller for a similar item, thus linking ACV directly to current market conditions. It reflects the item's desirability and the overall economic landscape, making it a relevant metric for determining the value for various types of insurance claims or asset evaluations.