How are losses typically settled under an inland marine policy?

Losses under an inland marine policy are typically settled based on the Actual Cash Value (ACV) method, which takes into account the replacement cost of the property minus depreciation. This approach reflects the real value of the property at the time of the loss, acknowledging that items lose value over time due to wear and tear, age, and other factors.

Inland marine policies cover property that may be in transportation or that is mobile, and since these items can be highly valued yet subject to depreciation, the ACV method provides a fair assessment for settling claims. This method ensures that the insured receives compensation reflective of the item's value at the time of loss, rather than the cost to replace it with a new item or its historical market price, which may not always accurately reflect current values.

Other options such as replacement cost would provide a new-for-old scenario typically not aligned with the cost approach of inland marine policies, while market value pertains to what a willing buyer would pay, which may not necessarily align with the insured's coverage. Salvage value refers to the value of the remaining property after a loss, which is not applicable to the settlement of loss itself. Hence, Actual Cash Value is the correct and most commonly utilized method for settling losses under an