Replacement Cost (RCV)
The amount required to repair or replace damaged property with materials of similar kind and quality, without deducting for depreciation.
Detailed Explanation
Replacement cost coverage pays what it costs to buy new items or rebuild structures today, unlike actual cash value which factors in depreciation. This coverage costs more but provides more complete protection for losses.
Practical Example
When Daniel's 8-year-old roof was damaged in a hailstorm, his replacement cost coverage paid for a brand new roof of similar quality without deducting for the age and wear of the original roof.
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