Insurance Replacement Cost

Replacement Cost Coverage — a property insurance term that refers to one of the two primary valuation methods for establishing the value of insured property for purposes of determining the amount the insurer will pay in the event of loss

What is Replacement Cost?

Replacement Cost is a method for valuing property so it can either be the dwelling that you live in like a home or a rental property or it can be your actual personal property or business property can be valued in two methods the first is replacement cost in the second most commonly used is actual cash value. Replacement cost is the way to understand replacement cost is new for old so what is it going to cost to replace whatever it was say if you had a kitchen fire set of cabinets what will cost in today’s dollars to replace those cabinets with like kind and quality so put new cabinets in of the same kind and quality in today’s dollars so that may be more or less than you would pay for them before but what the company is not going to do is attach depreciation they’re not going to put in 10 year old 15 year old cabinets they’re going to put in or give you the money to have a contractor put in new cabinets in today’s dollars. When you think about replacement cost and place the cost is what you want on your policy it’s a better way to value your property or where you get more benefit from a replacement cost policy census an actual cash value policy so when you ‘re thinking about replacement cost think new for old like kind and quality