What does the claims settlement for personal property under DP-2 and DP-3 rely on?

The claims settlement for personal property under the DP-2 and DP-3 forms primarily relies on the actual cash value (ACV). This method calculates the value of the property by taking into account its replacement cost minus depreciation, effectively providing the insured with a payout that reflects the item's current worth at the time of loss rather than its original cost or replacement cost.

The use of ACV is particularly important for personal property, as it ensures that policyholders receive an equitable reimbursement that corresponds with the item’s value at the time of loss, which may be less than what they initially paid for it due to depreciation. This approach is in line with industry standards for personal property under the DP-2 and DP-3 policies, acknowledging the natural wear and tear that occurs over time.

In contrast, the other options suggest methodologies that do not align with the DP-2 and DP-3 forms. For instance, using replacement cost for all items would imply that policyholders would receive a new-for-old replacement without considering the actual depreciation of items, which is not consistent with the settlement practice for these policies. The fixed value per item is typically not how personal property is evaluated under these forms, as it doesn't account for the individual value fluctuation over time.