Under a value reporting form (CP 13 10), which statement is true?

Under a value reporting form (CP 13 10), which statement is true?

• A. The insured pays a fixed premium at policy inception regardless of values.
• B. The insurer calculates the final premium based on the average actual values reported.
• C. The policy allows no reporting of fluctuating values.
• D. Premiums are determined solely by the maximum potential value.

Answer: (B)

Value reporting forms are used when property values can change, so the premium is tied to the actual values reported rather than staying fixed. Under this form, the insured provides regular value reports, and the insurer calculates the final premium based on those actual values—typically using the average of the values reported over the term. This approach ensures the premium fairly reflects the risk being insured as values rise or fall. The other statements don’t fit this concept: a fixed premium would ignore value changes, the form does involve reporting fluctuating values, and premiums aren’t determined solely by the maximum possible value.

Value reporting forms are used when property values can change, so the premium is tied to the actual values reported rather than staying fixed. Under this form, the insured provides regular value reports, and the insurer calculates the final premium based on those actual values—typically using the average of the values reported over the term. This approach ensures the premium fairly reflects the risk being insured as values rise or fall.

The other statements don’t fit this concept: a fixed premium would ignore value changes, the form does involve reporting fluctuating values, and premiums aren’t determined solely by the maximum possible value.