A building is insured for $100,000. A fire causes $150,000 in damages. What can the insured expect to receive if the policy covers actual cash value?

When an insurance policy covers actual cash value (ACV), it compensates the insured for the replacement cost of the damaged property minus depreciation. In this scenario, the building is insured for $100,000, but the damages from the fire amount to $150,000. Under an actual cash value policy, the insured would not receive the full amount of damages because the coverage is based on the value of the building, taking into account its age and condition, which results in depreciation.

Thus, the insurer will determine the cash value of the building at the time of the loss, which will typically be less than the replacement cost or the total damages incurred. Therefore, the correct expectation for the insured is the insured amount of $100,000 minus depreciation. This means they will receive a payout that reflects the current value of the building rather than the cost of new construction or the full extent of the damages.