Replacement cost for settling property insurance claims is more costly than the actual cash value method.

Question

Quizplus · Accepted Answer

The replacement cost method pays out the full cost of replacing or repairing a damaged item, while the actual cash value method deducts depreciation from the value of the item. Therefore, the replacement cost method is more expensive for insurance companies to pay out, making it ultimately more costly than the actual cash value method.

Replacement Cost for Settling Property Insurance Claims Is More Costly