What Does Functional Replacement Cost Provision or Endorsement Mean?

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What does Functional Replacement Cost Provision or Endorsement mean? Read on to discover the definition & meaning of the term Functional Replacement Cost Provision or Endorsement - to help you better understand the language used in insurance policies.

Functional Replacement Cost Provision or Endorsement

Functional Replacement Cost Provision or Endorsement

A property insurance provision changing the valuation basis otherwise applicable (actual cash value (ACV) or replacement cost (RC) value) to valuation at the cost to replace the damaged or destroyed property with property that serves the same function. Used when replacement of damaged property with substantially identical property is either impossible (perhaps due to technological change) or unnecessary.

We hope the you have a better understanding of the meaning of Functional Replacement Cost Provision or Endorsement.

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