Replacement Cost
InsuranceGlossary term
Definition
An insurance reimbursement method that pays the full cost to replace damaged or stolen property with a similar new item, without deducting for depreciation. Provides more comprehensive coverage than actual cash value but results in higher premiums.
Related terms
- Actual Cash ValueAn insurance reimbursement method that pays the replacement cost of an item minus depreciation. A five-year-old laptop originally worth $1,500 might have an actual cash value of only $400. Policies using this method cost less but provide lower payouts.
- PremiumThe amount paid for an insurance policy, typically monthly, quarterly, or annually. Premium costs vary based on coverage amount, deductible, and risk factors.
- Renters InsuranceInsurance that covers a renter's personal belongings against theft, fire, and certain other damages, plus provides liability protection. Typically costs $15-30 per month and is not covered by a landlord's building insurance policy.
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