Arkansas Insurance Adjuster Practice Exam

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Prepare for the Arkansas Insurance Adjuster Exam with flashcards and multiple choice questions, each offering hints and explanations. Equip yourself for your test confidently!

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!

Practice this question and more.

Jerry is using an expensive video recorder near the family pool when he slips and falls in, destroying the camera. Jerry bought the camera three years ago for $4,000, and it depreciates at $500 per year. A new, similar camera costs $5,000 today. Assuming the loss is covered, if Jerry had a replacement cost policy, how much would Jerry's insurer indemnify Jerry for the destroyed camera?

$2,500
$3,500
$4,000
$5,000

The correct answer is: $5,000

Option A is incorrect because the replacement cost policy does not take into account the depreciating value of the camera. The insurer would not only cover the original cost of $4,000, but also the current cost of a new, similar camera, which is $5,000. Option B is incorrect because, again, the depreciation of the camera over the past three years would not be factored in with a replacement cost policy. Option C is incorrect because, although it matches the original cost of the camera, it does not include the additional cost of a new, similar camera. Option D is the correct choice because it takes into account both the original cost of $4,000 and the current cost of a new, similar camera, totaling to $5,000. This is the amount that the insurer would indemnify Jerry for the destroyed camera.