AIC 304 EXAM 2025 LATEST EXAM QUESTIONS AND
CORRECT ANSWERS | A+ GRADE
Replacement cost - ans -The cost to repair or replace property using new
materials of like kind and quality with no deduction for depreciation.
Actual cash value (ACV) - ans -The cost to replace property with new property of
like kind and quality less depreciation.
Functional valuation approach - ans -A valuation method in which the insurer is
required to pay no more than the cost to repair or replace the damaged or
destroyed property with property that is its functional equivalent.
Straight-line depreciation method - ans -An accounting method of calculating
depreciation by taking an equal amount of an asset's cost as an expense for each
year of the asset's expected useful life.
Accelerated depreciation - ans -Depreciation that occurs more rapidly when an
item is first purchased and then more slowly in subsequent years.
, Decelerated depreciation - ans -Depreciation that occurs slightly for a given time
period and then increases rapidly.
Obsolescence - ans -The loss of value caused by changes in technology or fashion.
Market value - ans -The price at which a particular piece of property could be sold
on the open market by an unrelated buyer and seller.
Broad evidence rule - ans -A court ruling explicitly requiring that all relevant
factors be considered in determining actual cash value.
Agreed value method - ans -A method of valuing property in which the insurer
and the insured agree, at the time the policy is written, on the maximum amount
that will be paid in the event of a total loss.
Annual transit policy - ans -Policy that covers all shipments made or received by
the insured throughout a one-year policy period.
Trip transit policy - ans -Policy that covers a particular shipment of goods specified
in the policy.
Improvements and betterments - ans -Alterations or additions made to the
building at the expense of an insured who does not own the building and who
cannot legally remove them.
Coinsurance - ans -An insurance-to-value provision in many property insurance
policies providing that if the property is underinsured, the amount that an insurer
will pay for a covered loss is reduced.
Insurance-to-value provision - ans -A provision in property insurance policies that
encourages insureds to purchase an amount of insurance that is equal to, or close
to, the value of the covered property
Agreed Value optional coverage - ans -Optional coverage that suspends the
Coinsurance condition if the insured carries the amount of insurance agreed to by
the insurer and insured.
CORRECT ANSWERS | A+ GRADE
Replacement cost - ans -The cost to repair or replace property using new
materials of like kind and quality with no deduction for depreciation.
Actual cash value (ACV) - ans -The cost to replace property with new property of
like kind and quality less depreciation.
Functional valuation approach - ans -A valuation method in which the insurer is
required to pay no more than the cost to repair or replace the damaged or
destroyed property with property that is its functional equivalent.
Straight-line depreciation method - ans -An accounting method of calculating
depreciation by taking an equal amount of an asset's cost as an expense for each
year of the asset's expected useful life.
Accelerated depreciation - ans -Depreciation that occurs more rapidly when an
item is first purchased and then more slowly in subsequent years.
, Decelerated depreciation - ans -Depreciation that occurs slightly for a given time
period and then increases rapidly.
Obsolescence - ans -The loss of value caused by changes in technology or fashion.
Market value - ans -The price at which a particular piece of property could be sold
on the open market by an unrelated buyer and seller.
Broad evidence rule - ans -A court ruling explicitly requiring that all relevant
factors be considered in determining actual cash value.
Agreed value method - ans -A method of valuing property in which the insurer
and the insured agree, at the time the policy is written, on the maximum amount
that will be paid in the event of a total loss.
Annual transit policy - ans -Policy that covers all shipments made or received by
the insured throughout a one-year policy period.
Trip transit policy - ans -Policy that covers a particular shipment of goods specified
in the policy.
Improvements and betterments - ans -Alterations or additions made to the
building at the expense of an insured who does not own the building and who
cannot legally remove them.
Coinsurance - ans -An insurance-to-value provision in many property insurance
policies providing that if the property is underinsured, the amount that an insurer
will pay for a covered loss is reduced.
Insurance-to-value provision - ans -A provision in property insurance policies that
encourages insureds to purchase an amount of insurance that is equal to, or close
to, the value of the covered property
Agreed Value optional coverage - ans -Optional coverage that suspends the
Coinsurance condition if the insured carries the amount of insurance agreed to by
the insurer and insured.
