|
|
Replacement Cost
There are two basic standards routinely used by insurance companies in determining how policy holders will be reimbursed for losses. Replacement cost is the method preferred by most policy holders since it actually represents the best "deal."
Replacement cost is the monetary amount necessary to replace the damaged item with an item of comparable material and quality. This could mean, in the instance of a motor vehicle, that the policy holder actually would receive a newer model vehicle in compensation for one lost in a collision.
Most insurance companies, however, prefer to make reimbursements based on "actual cash value" or "market value" which is the replacement cost of the insured item minus depreciation on the item. Factors taken into account in determining depreciation of a vehicle might include model year of the vehicle, its repair history, and the number of miles on the vehicle at the time at which the damage occurred.
More Glossary Terms Explained here
|
| |
| |
| |
| Suggest an Article |
| Haven´t found the article
you are looking for, please suggest your article. We value
all your suggestions and comments. |
 |
|
|
