Replacement Cost
/ˈrɛplɪsmənt kɒst/
Definitions
- (n.) The monetary amount required to replace an asset with a new one of similar kind and quality at current prices.
The insurer agreed to pay the replacement cost of the damaged property.
- (n.) In insurance, the amount needed to repair or replace insured property without deduction for depreciation.
The homeowner's policy covered the replacement cost rather than the actual cash value.
Forms
- replacement cost
- replacement costs
Related terms
See also
Commentary
Replacement cost is crucial in insurance policies where coverage reimburses the full cost of replacing damaged property, differing from actual cash value, which factors in depreciation.
This glossary is for general informational and educational purposes only. Definitions are jurisdiction-agnostic but reflect terminology and concepts primarily drawn from English and American legal traditions. Nothing herein constitutes legal advice or creates a lawyer-client relationship. Users should consult qualified counsel for advice on specific matters or jurisdictions.