Replacement Cost Value (RCV)
The amount it would cost to replace damaged property with new property of the same kind and quality, without deducting for depreciation
Detailed Explanation
This valuation method provides more comprehensive coverage than actual cash value, as it pays the full cost to replace damaged items without considering their age or condition.
Practical Example
A dental practice has replacement cost coverage for their equipment. When a 5-year-old digital X-ray machine worth $25,000 is damaged beyond repair, their insurance pays the full $40,000 cost of a new equivalent model, despite the depreciation of the old machine.
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