what is replacement cost coverage 
in insurance replacement cost coverage is a policy that covers the full cost of your property in the event of a covered casualty rather than just the cash value for example if a storm causes damage to your home that is covered by a replacement cost policy the insurer will reimburse the full cost of repairing your property to the pre damage condition whether it is decades old or brand new in contrast an actual cost policy is likely to reduce the payout for property that has lost value due to age or depreciation 3the bottom linein business a replacement cost is the cost of restoring or replacing an asset that has been sold or damaged this may be different from the cash value of that asset due to factors like depreciation and market fluctuations 