Which statement BEST describes how covered losses are settled under a typical Equipment Breakdown Protection Coverage Form?

The statement that describes how covered losses are settled under a typical Equipment Breakdown Protection Coverage Form is that losses are normally paid at replacement cost, but an insured may change this with an Actual Cash Value endorsement.

In many insurance policies, replacement cost coverage allows policyholders to receive the amount necessary to replace damaged items with new items of similar kind and quality without deducting for depreciation. This provides a higher level of coverage compared to actual cash value, which takes depreciation into account and pays out less.

However, policies often include the option for the insured to modify the method of loss settlement based on their specific needs. By opting for an Actual Cash Value endorsement, the insured can choose to have claims settled based on the item's value at the time of the loss, factoring in depreciation. This provides flexibility in managing coverage and premium costs depending on the insured's preferences.

The other statements reflect variations that either do not align correctly with standard practices in such forms or misrepresent the replacement cost and actual cash value definitions and usages in the context of Equipment Breakdown Protection.