What Is Replacement Cost?
Replacement cost coverage pays to repair or replace damaged property with new materials of similar kind and quality, without deducting depreciation. It usually costs a bit more than actual cash value coverage but pays more at claim time.
Many Ontario home policies offer replacement cost on the building and contents, sometimes with conditions (for instance, you may have to actually replace the item to collect the full amount). Compare it with actual cash value when choosing coverage.
Frequently asked questions
What does replacement cost mean in insurance?
Replacement cost means your insurer pays what it costs today to repair or replace damaged property with new items of similar kind and quality, with no deduction for depreciation. It usually pays more at claim time than actual cash value.
Is replacement cost the same as market value?
No. Replacement cost is what it would cost to rebuild your home or replace your belongings, while market value is what a buyer would pay for the property, including the land. Your home should be insured to its rebuilding cost, which can be higher or lower than its market value.
Do I have to replace an item to get replacement cost?
Often, yes. Many Ontario home policies pay actual cash value first and the balance of the replacement cost once you actually repair or replace the item, so check your policy conditions with your broker.
Questions about Replacement Cost?
Our Ontario brokers can explain how it applies to your policy.
Talk to a Roughley broker