Replacement cost value

What it means

Replacement cost value is the full cost to repair or replace what was damaged with material of like kind and quality, with no deduction for depreciation. The standard ISO homeowners form (HO 00 03) settles dwelling losses this way, subject to conditions. One is insuring the home for at least 80% of its full replacement cost. If you carry less, the payment can be reduced.

The same form says the insurer will pay no more than actual cash value until repair or replacement is actually complete, with limited exceptions for small losses. Florida law requires insurers to offer replacement cost coverage before issuing a homeowners policy (§627.7011).

Why it matters to your claim

Replacement cost coverage usually arrives in stages. You first receive actual cash value, then the held-back depreciation once you repair or replace and send proof. In Florida, the insurer must initially pay at least ACV less the deductible and pay the remaining amounts as work is performed (§627.7011). United Policyholders warns that insurers rarely volunteer the balance, so keep receipts and ask for it in writing. Check your declarations page for whether your dwelling and contents are covered at replacement cost, and ask your insurer about any deadline to complete repairs. See water damage coverage.