Definition: Replacement cost coverage pays to replace damaged property with new property of like kind and quality, without deducting for depreciation.

Why it matters for salons and spas

Most salons want replacement cost for stations, chairs and equipment; values should be updated as prices rise.

Example

A five-year-old pedicure chair destroyed by fire is replaced with a new equivalent chair.

Related terms

Actual Cash Value (ACV) · Tenant Improvements (Betterments)

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