A valuation method based on replacing damaged property with new comparable property, subject to terms.
Why it matters
It can produce a different claim outcome than actual cash value.
Example
Replacing damaged flooring may be considered on replacement cost if conditions are met.
Common mistake
Assuming replacement cost ignores all limits and conditions.
Related terms
actual-cash-value;recoverable-depreciation
Definitions are educational summaries. The policy's definitions and applicable law control a specific claim or coverage question.