Law360, New York (April 9, 2015, 5:40 PM EDT) -- When an insured suffers a property loss, the insurance policy defines the parameters of recovery. Typically, a property insurance policy's default valuation provision for a property loss is the actual cash value of the property. Calculation of the actual cash value often takes the age of the property and depreciation into account. Therefore, payment based on actual cash value often does not cover the cost to actually replace the damaged property. Because of that, many insureds choose to pay the additional premium to purchase replacement cost coverage to ensure their property may be rebuilt to its condition before the loss or damage. Of course, the additional premium is based on the assumption that replacement cost is, typically, significantly higher than the property's actual cash value....
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