Replacement Cost

The insurance covers the insured’s dwelling or damaged personal property to the exact dollar amount of its worth.

Though it costs more than an actual cash value policy, replacement cost coverage doesn’t depreciate the damaged item’s value before reimbursing the policyholder. That enables the insured person to replace the item almost immediately at the value it held when it was first purchased.

With the price of housing tied so tightly to the economy’s fluctuations, replacement cost is advised when purchasing home insurance, as long as it doesn’t put undue strain on the homeowner’s budget.


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