West Virginia Property and Casualty Licensing Practice Exam

Under a commercial auto policy, what type of value is specifically excluded regarding physical damage to a covered vehicle?

1. Market value

2. Domination value

3. Replacement value

4. Actual cash value

The correct answer is: Domination value

In the context of a commercial auto policy, the type of value specifically excluded regarding physical damage to a covered vehicle is indeed tied to the terminology used in insurance. The correct answer, domination value, refers to a valuation method that is not standardly recognized or used in insurance contracts. Commercial auto policies typically provide coverage based on standard valuation methods, such as actual cash value, replacement cost, or market value, all of which consider either the cost to replace the vehicle or its current value after depreciation. However, domination value does not align with these recognized terms, making it the specific type of value that is excluded. Understanding the significance of these definitions is crucial for policyholders to ensure that they have the appropriate coverage and valuation methods in place. When valuing physical damage to a vehicle, insurers rely on accepted terms like actual cash value, which reflects the vehicle's replacement cost minus depreciation. Thus, knowing what valuation is excluded helps in understanding the terms and conditions of coverage under a commercial auto policy.