A “replacement cost policy” means your insurance policy covers the “replacement cost value” (RCV) of the repairs – less your deductible.  A common misconception is that homeowners will be paid the full replacement cost in the first check.  As mentioned in #3 “recoverable depreciation” has been withheld to make sure you get the work done.  As one check will come later plus any supplemental invoices.  (See recoverable depreciation.)