Replacement Cost is the amount it would take to replace or rebuild your home or repair damage with materials of similar kind and quality without any deduction for depreciation. Many insurers require homeowners to insure their homes for at least 80 percent of the replacement cost. If the homeowner fails to insure for 80 percent of the replacement cost, a penalty is applied to partial losses. Whether your home is insured for replacement value or actual cash value, it is important to keep track of its value. Check with your agent or insurance company at least once a year to make sure that your policy provides adequate coverage.
Depreciation is the decrease in value of property over time because of age or wear and tear.
Most policies agree to pay some expenses if your home is damaged and you cannot live there while repairs are being made. These expenses could include limited hotel and restaurant costs and storage charges. This coverage protects you against claims brought against you by others asserting that they were hurt or that their property was damaged by something you did or failed to do. This coverage protects you and your family members who live with you. Regardless of who is at fault, this coverage pays medical expenses for others accidentally injured on your property.