CFA Insurance Appraisal & Estate Valuation Flashcards
6 cards from real CFA practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 6 CFA Insurance Appraisal & Estate Valuation flashcards as text
What is 'actual cash value' (ACV) in firearm insurance, and why do collectors generally avoid it?
Answer: Replacement cost minus depreciation; it may not reflect a collectible's appreciated market value
ACV is replacement cost minus depreciation, which can significantly undervalue collectible firearms that have appreciated in value over time.
Which type of insurance policy is specifically designed for high-value firearm collections and typically provides broader coverage than standard homeowners policies?
Answer: Inland marine insurance
Inland marine insurance (often called a 'floater' policy) is designed for high-value personal property including firearm collections and provides broader, more flexible coverage than standard homeowners policies.
What photographic documentation standard is recommended for insured firearm collections?
Answer: Individual photos of all sides of each firearm including close-ups of serial numbers
Best practice requires individual photographs showing all sides of each firearm plus close-ups of serial numbers and unique markings to fully support any future insurance claim.
A collector's home is burglarized and firearms are stolen. What is the first required step from a documentation and legal standpoint?
Answer: File a police report and notify ATF if NFA-regulated items were among those stolen
Stolen firearms must be reported to local police immediately, and if NFA-regulated items were stolen, ATF notification is also a legal requirement.
What is the primary purpose of maintaining a detailed firearms inventory log for insurance purposes?
Answer: To provide a pre-loss record of each firearm's description, condition, and value for expedited claim processing
A detailed pre-loss inventory log allows collectors to quickly document stolen or damaged firearms and supports faster, more accurate insurance claim processing.
When an insurance adjuster requests a 'diminution of value' appraisal after a firearm is damaged and repaired, what is the appraiser assessing?
Answer: The reduction in market value that persists after repair compared to pre-loss value
A diminution of value appraisal measures how much the firearm's market value has permanently declined even after repair, compensating the owner for residual loss in value.