Insurance Terms Glossary: Definition of Replacement Cost

Replacement Cost

Insurance Terms Glossary

Replacement Cost

re·place·ment cost

\ri-ˈplās-mənt\ kȯst\


Insurance coverage that pays the amount required to replace damaged personal property without subtracting depreciation. However, these policies have a maximum dollar amount that can be paid.

The replacement cost of the broken vase was deemed to be $1,000, an amount the policyholder believed was fair.
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