noun
replacement cost
In plain English
What it costs to rebuild or replace something today, with no deduction for age or wear.
The opposite of actual cash value (ACV). On a 15-year-old roof, ACV gets you the depreciated value; replacement cost gets you a new roof. Most modern homeowners policies are written replacement cost on the dwelling, but check Coverage C (personal property) — that's where ACV sometimes hides.
What it covers
The full cost to repair or replace damaged property with materials of like kind and quality, at current prices, without deduction for depreciation.
What it does not cover
It does NOT mean unlimited. The Coverage A limit on the dec page is still the cap. Extended replacement cost (typically 25-50% above the limit) provides a buffer.
Where it trips people up
Most replacement-cost policies pay you ACV first and then 'recoverable depreciation' once the work is actually done. If you don't repair, you don't get the depreciation portion.
The technical version
The cost to repair or replace damaged property with materials of like kind and quality at current prices, without deduction for depreciation, subject to the policy limit.