Under a replacement cost policy, how much would Jerry's insurer indemnify him for his destroyed camera?

Under a replacement cost policy, the insured is entitled to receive the full cost of replacing the destroyed item with a similar one of like kind and quality, without deducting for depreciation. In this case, if the correct answer identifies the amount that accurately reflects the current cost necessary to replace Jerry's destroyed camera, it implies that the amount of $5,000 is what his insurer would indemnify him.

This approach of indemnifying the full replacement cost rather than the actual cash value (which would consider depreciation) ensures that the policyholder can replace the lost item without incurring additional financial burden, thereby fulfilling the purpose of providing adequate financial protection against loss. The context of different values illustrates how replacement cost policies are structured to meet the current market prices for replacing assets rather than compensating based on their original purchase price or depreciated value.