Every answer and its explanation appears here once you have finished the path. Each one then links to the matching glossary entry, where the concept is set out in full with its worked example.
1. A 1.2 million sculpture, depreciation capped at 10 percent of the sum insured. Full restoration at 180,000 euros with 12 percent residual depreciation: what does the insurer pay out?
300,000 euros: 180,000 of work and 144,000 of depreciation reduced to the 120,000 cap
Twelve percent of 1.2 million is 144,000, and the cap of 10 percent of the sum insured brings it to 120,000: the insurer pays out 300,000 and the insured bears the 24,000 the cap leaves it. The computation runs in two steps, depreciation first then the cap, not the other way around. The 324,000 answer forgets the cap; the one applying it to the whole settlement gives it a reach it does not have, since it bounds only depreciation and never the works.
Glossary entry →2. Stabilization costs 90,000 euros and leaves 18 percent depreciation. Compared with full restoration, who gains what?
Heavy restoration costs the insurer 90,000 more and saves the insured 72,000: the two parties do not have the same optimum
Under stabilization the insurer pays out 210,000 and the insured bears 96,000; under full restoration it pays out 300,000 and the insured bears 24,000. The gap is 90,000 for one and 72,000 for the other, in opposite directions, which makes the decision adversarial where it looked technical. The answer believing the insured indifferent is the most instructive error: the cap bites either way, but it leaves the excess with the insured, and that excess is not the same.
Glossary entry →3. The adjuster goes straight to full restoration, on the ground that you repair properly or not at all. What is that reflex worth here?
It is the right reflex in every other line, and here is where it costs: neither party gets its optimum by letting the restorer arbitrate
Elsewhere, repairing as well as possible moves toward the indemnity principle and serves everyone; here residual depreciation and its cap introduce an economic trade-off that the quality of the restoration does not settle. The point to retain: neither route wins by default, and the choice belongs to the parties and not to the restorer, whose craft is to do good work and not to allocate a burden. The answer declaring stabilization always preferable makes the symmetrical error, generalizing a computation that depends on the file's three figures.
Glossary entry →4. Nobody quantified the total-loss route. What does it give, and why is that worth knowing even when it is unfavorable?
950,000 net, that is 1.2 million less 250,000 of salvage: very unfavorable to the insurer here, but on worse damage the same computation flips and the insurer gains by proposing it
Total loss is never quantified as the agreed value alone: a restored work has a market, and salvage is deducted since the insurer becomes its owner. Retaining only the 1.2 million is the error that makes this route look either unreachable or ruinous depending which side you are on. Its flip is the useful point: it is unfavorable to the insurer on this file and will turn favorable to it on heavier damage, once works plus capped depreciation exceed the agreed value less a shrinking salvage, so computing it is part of handling the claim even when it is not the route taken.
Glossary entry →5. The depreciation cap reads as a protection. What does it actually produce in this file?
It makes the two interests diverge: it bounds what the insurer pays of the depreciation, so it leaves the insured a share that varies with the route chosen
With no cap the insured would be indemnified for all the depreciation and would have no reason to prefer one route over the other: it is the cap that makes it bear 24,000 in one case and 96,000 in the other, and therefore creates the conflict. Reading it as a protection is accurate from the insurer's side and misleading from the insured's, which discovers it transfers onto itself exactly the share it thought it was insuring. The answer confining it to light damage inverts its domain: it bites only on large damage, where depreciation exceeds the threshold.
Glossary entry →