Replacement Cost

Do I have replacement Cost Coverage, and why do I want it?

A large majority of the home policies being offered today automatically include replacement cost coverage for most items.   Your policy will indicate it, if you have replacement cost coverage.

Replacement cost means the insurance company will pay to replace all damaged property with new items rather than what it would cost for a similar used items.  

Of course, having replacement cost insurance means you have to carry enough coverage to replace the property you are insuring for the amount it would cost to replace new. You can’t insure for the depreciated value and expect the insurance company to pay your loss based on replacement cost.

What if I don't want to replace a certain item?

You always have the option not to replace the item, and if you do n't, you will still receive the depreciated value.  

Are all items insured for replacement cost? 

Anytime items are insured and listed separately on your policy they may have different settlement options than does your base policy.   Most often items that you chose to insured individually will be insured for stated amount meaning the insurance company and you have agreed on the value of the item and the amount agreed on will be the amount paid whether you replace it or not.   This is often the case with Jewelry, Art Work, and Antiques.   You are often required to have these items appraised in order to establish their true value.   

Boats and motors, golf carts, and lawn tractors may not be insured for replacement cost.   These items often have replacement cost if they are newer but when they are older they may be limited to actual cash value coverage (depreciated value).