Replacement cost
The cost to repair or replace damaged property with a similar item without deducting depreciation, subject to policy conditions.
Also called
rebuilding cost · replacement cost coverage
What it means
A property valuation basis intended to replace eligible damaged property with a comparable substitute.
Example
A covered five-year-old appliance may be valued using the cost of a comparable replacement rather than its depreciated value.
Canada context
Insurance wording and mandatory coverage can differ by province, insurer and policy form. Read the declarations, endorsements and full policy wording that apply to you.
Common confusion
Replacement cost is not market value and payment conditions may require actual repair or replacement.
Important
This plain-language explanation is general information, not legal advice or a substitute for your policy wording. Ask a licensed insurance professional about your situation.
Last reviewed August 17, 2026
Sources
General information only. Coverage and terminology can differ by province, insurer, and policy wording. Consult your policy and a licensed insurance professional.