Extended Replacement Cost

Definition

  • A policy that offers coverage exceeding the actual cash value of the property, sometimes by as much as 25%. The extended replacement cost is commonly used to account for sudden price increases due to labour and building material shortages after a large-scale disaster.

Synonyms
enhanced, enlarged, increased replacement cost, recover, over-and-above, compensate

Related Terms and Acronyms

  • Act of God (AOG) Acronym,
    • When used in insurance policies, an event caused by natural forces such as hail, rain, tornado, lightning, floods or earthquakes, which results in damage to property.
  • Actual Cash Value (ACV) Acronym,
    • The replacement cost of an insured asset with depreciation accounted for.
    • The amount of money that a broker or dealer has invested in the purchase and repair of a used vehicle.
  • Appraised Value Definition,
    • An educated opinion of how much a property is worth.
  • Book Value Definition,
    • A valuation method determined by taking the original cost of an asset and subtracting any depreciation, impairment or amortization costs.
    • The value of a property, item or company as a capital asset based on its cost plus any additions, subtracting depreciation.
  • Catastrophe Hazard Definition,
    • An event, such as a hurricane or earthquake, that poses a risk of a catastrophic loss.
  • Catastrophe Insurance Definition,
    • Insurance that covers losses due to catastrophe hazards such as hurricanes, earthquakes and terrorist attacks.
  • Current Market Value (CMV) Acronym,
    • The estimated price determined by the recent sale of similar properties.
  • Fair Market Value (FMV) Acronym, Very Important,
    • The highest price that a buyer would pay for a property and the lowest price a seller is willing to accept.
  • Replacement Cost Definition,
    • The amount one would have to pay to rebuild and refurnish with materials and items of similar value. The cost of replacing an asset with one of equal value without taking depreciation into account.
  • Valuation Definition,
    • The process of finding the worth of an asset or business.
    • The estimation of a property's price value through an appraisal.
  • Valuation Clause Definition,
    • A clause in an insurance contract that states how much an insurer is willing to pay for an asset after an insured event.
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