Under ISO commercial inland marine conditions, covered property is valued at the smallest of which amounts?

• A. ACV of property at time of loss
• B. Cost of reasonably restoring property to its condition prior to loss or damage
• C. Cost of replacing property with substantially identical property
• D. The largest of ACV, restoration cost, and replacement cost

Answer: (B)

The main idea is that inland marine coverage aims to restore the damaged property to the condition it was in before the loss. Under ISO commercial inland marine conditions, the amount paid is based on the cost to reasonably repair or restore the property to its pre-loss condition. This focuses on getting the property back to usable state rather than paying the higher price of replacement or the depreciated value of the item.

This restoration-cost basis differs from actual cash value, which accounts for depreciation, and from replacement cost, which pays to replace with new or substantially identical property. Restoration cost is the figure insurers use to indemnify, up to the policy limits, for the work needed to bring the property back to its previous condition. If restoration isn’t feasible, the policy may allow other settlement methods, but the standard approach centers on restoration costs.