Replacement Cost

Importance: 0.43

Is a company: no

Is a proper noun: no


  • asset replacement cost
  • replacement value
  • item replacement cost
  • replacement cost value

Definition of Replacement Cost

  1. The amount of money needed to replace an asset with another of equal value. Depreciation is not taken into account when calculating an asset's replacement cost. For example, if a refrigerator is damaged due to an insured event, the replacement cost will be equal to the cost of a new refrigerator, regardless of if the damaged refrigerator is a year old or twenty years old. Also known as a "replacement cost value" or "replacement value."

Related Terms and Acronyms

  • 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.
  • Insured Value Definition,
    • What an insurer will pay to replace an insured asset.
  • Insurable Value Definition,
    • The total amount that an asset can be insured for.
  • Actual Cash Value (ACV) Acronym,
    • The amount of money that a broker or dealer has invested in the purchase and repair of a used vehicle.
    • The replacement cost of an insured asset with depreciation accounted for.
  • Extended Replacement Cost Definition,
    • A replacement cost for an asset that exceeds that of the actual cash value of the asset.
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