100% replacement cost insurance-condominium

What is 100% replacement cost anyway?

I get asked this question every day it seems. Mostly by a mortgage lender that needs to check off a box on an application.

What does it mean?

Most policies have a replacement cost provision. Replacement cost means that the insurer will replace without applying depreciation. Simple.

So why ask for 100% replacement cost? What is it?

Problem is nobody really knows till you replace it. It is a educated guess or it comes from a table with a calculator.

Why would someone say that yes it is 100% replacement cost? How do they know? Who died and made them the expert? Just because they used a construction estimator, or they exceeded the companies suggested insurance to value guideline, does not make them right.

So we make a valued decision. But for some property manager or insurance professional to check off yes this is 100% replacement cost is tantamount to a guarantee.

Unless you have a guaranteed replacement clause on the condominium policy, the 100% limit is someone’s (hopefully) best judgement. I guess we will not know for sure till the property is replaced.


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