Which term is defined as the amount needed to replace damaged property with like kind and quality as of the date of loss?

Which term is defined as the amount needed to replace damaged property with like kind and quality as of the date of loss?

• A. Replacement Cost
• B. Actual Cash Value
• C. Market Value
• D. Agreed Value

Answer: (A)

Replacement cost value is the amount needed to replace damaged property with like kind and quality as of the date of loss. It uses current prices and does not subtract depreciation, so you’re reimbursed to replace the item today rather than for what it was worth when it was new. This differs from actual cash value, which accounts for depreciation; market value, the price it would fetch in the open market; and agreed value, a pre-set amount agreed upon for certain items.

Replacement cost value is the amount needed to replace damaged property with like kind and quality as of the date of loss. It uses current prices and does not subtract depreciation, so you’re reimbursed to replace the item today rather than for what it was worth when it was new. This differs from actual cash value, which accounts for depreciation; market value, the price it would fetch in the open market; and agreed value, a pre-set amount agreed upon for certain items.