In an unendorsed homeowners policy, how are losses to personal property settled?

In an unendorsed homeowners policy, losses to personal property are settled on an actual cash value basis. This means that when a claim is made for lost or damaged personal belongings, the insurer will pay for the item's value at the time of the loss, which takes into account depreciation. The actual cash value reflects the original cost of the item minus any depreciation that has occurred over time.

This method ensures that policyholders receive a compensation amount that is fair, considering the age and condition of the property at the time of the loss. It is important to understand that when discussing settlement options, replacement cost coverage—which pays the cost to replace the item without deducting depreciation—requires an endorsement to the standard policy. Therefore, under the unendorsed standard homeowners policy, the settlement for personal property losses specifically adheres to the actual cash value approach.