Connecticut Property Insurance License Practice Exam

The formula that accurately calculates a deductible loss involves determining the adjusted basis of the property, accounting for any salvage value, and subtracting the insurance proceeds received. The adjusted basis represents the original value of the property, including any adjustments due to improvements or depreciation.

In this context, the salvage value refers to any remaining value of the property after the loss has occurred. By subtracting both the salvage value and the insurance proceeds from the adjusted basis, this formula effectively identifies the actual financial loss sustained by the property owner. This approach ensures that the owner does not profit from the loss since the insurance proceeds compensate for some of the loss incurred.

The other choices involve variations that either add or subtract incorrectly some of the necessary components. For instance, adding insurance proceeds or adjusting basis in ways that do not reflect the true loss in value leads to an inaccurate calculation of the deductible loss. Therefore, the chosen formula correctly reflects the economic impact of the loss on the insured.