Price of purchasing or constructing a new item of property to replace an older, used item of property. Though comparable to the property being replaced, the replacement property may be a newer model, may reflect improved construction techniques, and may be ‘new rather than used and ‘old.’ for any of these reasons, Insurance coverage on a replacement cost basis may be more favorable to an insured than Insurance coverage on an actual cash value basis.
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The cost of replacing property without deduction for depreciation. Often referred to as new for old, because the insured’s old property is replaced with new property. Under replacement cost, an insured’s ten year old sofa will be replaced with a new sofa. See Actual cash value.
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The cost to repair or replace an insured item. Some insurance only pays the actual cash or market value of the item at the time of the loss, not what it would cost to fix or replace it. If you have personal property replacement cost coverage, your insurance will pay the full cost to repair an item or buy a new one once the repairs or purchases have been made.
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US: The cost to repair or replace property at construction costs prevailing at time of loss; the cost to repair or rebuild property without considering depreciation. (See Actual Cash Value)
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The value of property as the purchase price of a similar property. Replacement Cost, New : The cost of replacing or repairing the property damaged, destroyed, or taken without any deduction for physical depreciation or economic obsolescence. Replacement Cost New Less Depreciation and Economic Obsolescence : The cost of replacing or repairing the property damaged, destroyed, or taken les a deduction for physical (not accounting) depreciation and economic obsolescence.Replacement Cost Insurance : Insurance providing that the insured will be paid the cost of replacing the damaged property without deduction of depreciation. The usual replacement cost form provides that the property must actually be replaced before the insured may collect a claim under it. It is available only for building, plant and machinery, with few exceptions.