In property insurance, what kind of value determination is based strictly on what the market will bear?

• A. Replacement cost
• B. Book value
• C. Market value
• D. Net asset value

Answer: (C)

The concept of market value in property insurance refers to the determination of value based strictly on current market conditions and what buyers are willing to pay for a property at a given time. It is intrinsically linked to the principle of supply and demand, reflecting how much similar properties have sold for recently in the locality.

Market value takes into account various factors such as the location, condition, and features of the property, along with broader economic conditions affecting the real estate market. This contrasts with other forms of valuation like replacement cost, which focuses on the cost to replace the property with a similar one, or book value, which refers to the value of an asset according to its balance sheet. Net asset value, commonly used in financial contexts, represents a company's total assets minus its liabilities and is not specific to real estate. Thus, market value is the most relevant concept when the valuation is determined based on actual transaction data in the current marketplace.