Answer :
A individual with actual cash value coverage would get $6,600 for two-year-old furniture that was destroyed in a fire.
How would you define insurance?
Risk management uses insurance as a tool. By purchasing insurance, you protect yourself from unanticipated financial losses. The insurance provider pays you or a person of your choosing if something unfavorable happens to you.
What are insurance premium payments?
The money that a person or company spends on an insurance policy is known as the insurance premium. Payment of premiums is required for health, life, vehicle, and home insurance. Once the premium has been collected, it is given to the insurance provider.
In the given query,
Insurance payment = Replacement cost - Depreciation
= $11,000 - [($11,000 / 5) × 2]
= $11,000- $4,400
= $6,600
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