Replacement cost (RC)
A settlement basis that pays what it costs to rebuild or replace with similar new materials, with no deduction for age or wear.
Also called: RCV, Replacement cost value
Replacement cost coverage pays what it costs to repair or rebuild your home with materials of similar kind and quality at today's prices, without subtracting depreciation for age or wear.
It is the more protective way to settle a claim. Because the payout is not reduced for age, you can replace damaged parts with new ones without paying the difference yourself, apart from your deductible.
Carriers often restrict replacement cost to newer manufactured homes and may require a permanent foundation, good tie-downs or a recent roof. The dwelling limit still needs to be high enough to cover the true rebuild cost, or you may be underinsured.
Common questions
Does replacement cost cover more than my policy limit?
Not normally. The payout is capped at your dwelling limit unless you add an extended replacement cost endorsement.
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