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What is Replacement Cost?
Replacement cost coverage pays what it would cost today to replace damaged property with new materials of like kind and quality, without deducting for depreciation. Most insurers pay ACV first, then the depreciation holdback once repairs are completed.
Examples
- A destroyed 10-year-old roof is replaced with a brand-new roof at current material prices.
- Replacement cost on contents pays for new furniture, not the used-market value.
- Dwelling replacement cost is usually set as a fixed limit, not the actual rebuild estimate.
Why this matters
ReadMyPolicy flags whether your dwelling and contents are truly on replacement cost — and whether your limit is high enough for current construction prices.
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