Replacement cost concerns the cost of replacing or rebuilding insured property on the basis defined in the policy.
The distinction that matters
It is different from market value, and policy limits, conditions and underinsurance provisions can affect settlement.
What to check
- Check rebuilding and associated costs.
- Review sum insured and limits.
- Read replacement conditions and exclusions.
Example to discuss
A homeowner considers demolition and professional fees rather than using the property’s sale price as the rebuilding cost.
This is a hypothetical comparison, not a customer claim or a determination of cover.
Sources and further reading
General information only. The policy, schedule and applicable rules determine the actual position. For a personal decision, use an appropriately qualified adviser or the relevant provider.