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148:" is one of several methods of determining the value of an insured item. Replacement cost is the actual cost to replace an item or structure at its pre-loss condition. This may not be the "market value" of the item, and is typically distinguished from the "actual cash value" payment which includes a deduction for depreciation. For
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If insufficient coverage is purchased to rebuild the home, the insured may have to pay substantial uninsured costs out of their own pocket. In 2013, a survey found that about 60% of homes have replacement cost estimates which are too low by an estimated 17 percent. In some cases, estimates can be too
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Although insurance is decided at the state-level, most states follow similar practices. In
California and Texas, the insured is responsible for determining the proper amount of insurance. However, one survey found that about half of consumers believe it is insurer's responsibility, and consumers may
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Replacement cost coverage is designed so the policy holder will not have to spend more money to get a similar new item and that the insurance company does not pay for intangibles. For example: when a television is covered by a replacement cost value policy, the cost of a similar television which can
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Historically, consumers could purchase "guaranteed replacement cost" coverage which ensure sufficient limits if the estimate was too low, but these became "virtually extinct" after several
California disasters including the Oakland firestorm of 1991, the Laguna Beach fires, and the 1994 Northridge
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If insurance carriers honestly determine replacement cost, it becomes a "win-win" for both for the carriers and the customers. However, when a replacement cost determination is made by the carrier (and, perhaps, its third party expert) that exceeds the actual cost of replacement, the customer is
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come to this conclusion through the insurer's processes, which one legal scholar argues creates a "reasonable expectation" of coverage, which is a controversial insurance law doctrine adopted in certain states.
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likely to be paying for more insurance than necessary. To the extent that the carrier has knowingly or carelessly sold excessive (i.e. unnecessary) insurance, such a practice may constitute consumer fraud.
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be purchased today determines the compensation amount for that item. This kind of policy is more expensive than an Actual Cash Value policy, where the policyholder will not be compensated for the
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156:, a contractual stipulation that the lost asset must be actually repaired or replaced before the replacement cost can be paid is common. This prevents overinsurance, which contributes to
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of an item that was destroyed. The total amount paid by an insurance company on a claim may also involve other factors such as
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refers to the amount that an entity would have to pay to replace an asset at the present time, according to its current worth.
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PropertyProfile, Bluebook
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Thomas JE, Wilson B. (2005). The
Indemnity Principle: Evolution from a Financial to a Functional Paradigm].
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Insurers purchase estimations on replacement cost. Major estimation companies include
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184:. One of the champions of the replacement cost method was the Dutch professor in
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Gibson v. Geico (1984) 162 Cal.App.3d 441, 447., as cited by Silvia San
Nicolas.
460:"Collateral Replacement Cost Risk: What Every Lender and Investor Needs to Know"
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and insurance nonprofit United
Policyholders to depublish the case.
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383:"The Replacement Cost Claim: It's Just Like Any Other, or Is It?"
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57:. Unsourced material may be challenged and removed.
487:"Everett vs. State Farm General Insurance Company"
321:"What is replacement cost? Definition and meaning"
442:Covered by homeowners insurance? Don't be so sure
240:Everett vs. State Farm General Insurance Company
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8:
238:In California, the 2007 case on the issue,
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348:Journal of Risk Management & Insurance
242:, provoked an unsuccessful request by the
117:Learn how and when to remove this message
407:. Family Financial Education Extension.
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524:www.propertyinsurancecoveragelaw.com
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55:adding citations to reliable sources
211:Home insurance in the United States
652:Accidental death and dismemberment
365:"Construction Estimating Services"
244:California Department of Insurance
203:subsidiary Marshall Swift-Boeckh,
144:industry, "replacement cost" or "
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568:Charles Marohn (7 October 2011).
270:( is an important issue to avoid
778:Directors and officers liability
405:University of Missouri Extension
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42:needs additional citations for
278:and eventual replacement of a
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549:California Western Law Review
230:Underinsurance responsibility
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458:San Nicolas, Silvia (2006).
978:Insurance-linked securities
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389:. Adjusters International.
258:, the replacement cost of
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465:. Bluebook International
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264:transport infrastructure
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737:Variable universal life
1402:Health insurance costs
803:Professional liability
146:replacement cost value
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773:Collateral protection
763:Business interruption
260:public infrastructure
1481:Corpus Juris Civilis
543:Fox, Joshua (2011).
491:United Policyholders
325:Market Business News
268:water infrastructure
51:improve this article
1540:Rochdale Principles
1535:Mutual savings bank
1530:Mutual organization
1515:Cooperative banking
1432:Mesopotamian banker
712:Longevity insurance
66:"Replacement value"
1605:Property insurance
1292:Insurable interest
793:Payment protection
694:Payment protection
371:. Tamara W Felder.
186:Business economics
154:property insurance
150:insurance policies
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1199:Actual cash value
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679:Income protection
369:Remote Estimation
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274:. If the cost of
135:replacement value
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1214:Cancellation
1005:Catastrophic
990:Climate risk
818:Trade credit
577:. Retrieved
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328:. Retrieved
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49:Please help
44:verification
41:
1555:Trade union
1510:Cooperative
1183:Uncertainty
1042:Index-based
1010:Multi-peril
968:Reinsurance
927:Public auto
832:Residential
276:maintenance
182:deductibles
1350:by country
1348:Insurance
1322:Total loss
1243:Deductible
1204:Cash value
1148:Act of God
1133:Insurance
1047:Parametric
1027:Expatriate
903:Transport/
869:Landlords'
854:Earthquake
742:Whole life
662:Disability
579:12 January
554:2016-01-17
529:2016-01-17
496:2016-01-17
469:2016-01-17
428:2016-01-17
330:2023-07-30
307:References
284:bankruptcy
272:insolvency
77:newspapers
1496:Syndicate
1462:Collegium
1357:Australia
1312:Risk pool
1282:Indemnity
1253:Copayment
1187:Knightian
1099:Terrorism
1069:Liability
937:Satellite
798:Pollution
722:Term life
631:insurance
629:Types of
622:Insurance
262:(such as
201:CoreLogic
142:insurance
129:The term
1599:Category
1576:Category
1454:§275–277
1372:Pakistan
1220:Pro rata
1109:War risk
1074:No-fault
985:Casualty
942:Shipping
912:Aviation
889:Renters'
884:Property
879:Mortgage
849:Contents
823:Umbrella
783:Fidelity
751:Business
647:Accident
290:See also
1501:Benefit
1488:Digesta
1424:History
1158:Actuary
1114:Weather
1104:Tuition
1094:Takaful
1022:Deposit
952:Vehicle
195:Vendors
140:In the
91:scholar
1377:Serbia
1337:Profit
1209:Broker
1135:policy
947:Travel
932:Marine
839:Boiler
813:Surety
657:Dental
639:Health
93:
86:
79:
72:
64:
1473:Guild
1367:India
1362:China
1231:Claim
1037:Group
1017:Cyber
995:Crime
961:Other
894:Title
859:Flood
463:(PDF)
158:arson
98:JSTOR
84:books
1446:§234
1168:Risk
1138:and
1000:Crop
864:Home
758:Bond
704:Life
581:2023
280:road
160:and
152:for
70:news
1140:law
1079:Pet
266:or
254:In
180:or
133:or
53:by
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1452:;
1448:;
1444:;
572:.
547:.
522:.
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478:^
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339:^
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20:)
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