Replacement Costs Law and Legal Definition

A replacement cost refers to the cost of a building with equivalent utility but with modern materials and eliminating deficiencies of the building it replaces. A replacement cost coverage entails a remedy designed, as well as possible, to place the insured in the position it would have occupied had the loss not occurred.

The following is an example of a case law defining replacement cost:

Replacement cost is the actual cost of repair or replacement without deduction for depreciation. [Ditch v. Yorktowne Mut. Ins. Co., 343 Pa. Super. 22 (Pa. Super. Ct. 1985)].