"replacement cost" insurance question

Factual Questions
1

i’m sure someone here has been through this and can answer this.
if you have a replacement cost insurance policy what method do they use to decide how much you get back when it comes to multiple items.

for example:

say i have something listed as “misc tools” and they give me say $100 with $20 replacement cost benefits remaining. now do i only get that $20 if i have a receipt for $120 in new tools?

also, what about multiple items. like, if i had 50 cd’s and they gave me say $500 with $100 replacement cost benefits remaining. is that divided for each CD? i mean, if i bought 5 cd’s today for $15 each would i get $10 back (the $2 RC [50/$100 RC] x 5)? or would i get $75 back (whatever the cost up to the the maximum RC).

thanks in advance for any help. i hope i explained my questions well enough!

2

Depending on your expected loss, you would have your possesions appraised against the value of the newer replacement item.

Above all else , talk to an insurance agent about questions regarding coverage.

Declan

3

i don’t mean, ‘how do they arrive at the RC price?’. i know insurance companies do things different from one another.

my question is more about how the RC benefits remainder is paid.

4

I Have been in insurance for 25 years, in my state it goes like this.

If you have a replacement cost endorsement on a homeowners policy it will guarantee to pay X number of dollars over the actual cash value of an item if you actually replace it

My best example goes like this.

Say you have a television that you paid $1000 five years ago, and the TV is stolen.

Well rule of thumb is that electronics depreciate at 10% a year, so at the time of loss the TV was worth $500 ACV.

If you don’t replace it you stop here and take the money.

But if you replace it with as close as you can get to the same make and model you get more, say the new TV is $1200 for some reason, the insurance will pay the full bill and give you $1200.

You only get the $1200 if you spend it, no cash in lieu.

The example has been challenged in several states to enable the insured to pocket the replacement value but not actually replace the goods … Not sure of the current status on these cases.

Hope this helps