What is replacement cost in auto insurance?
The amount it costs for an insurance company to replace an automobile at the current market price is the replacement cost. Replacement cost does not consider depreciation of the automobile due to age, mileage or condition.Policy TermsReplacement cost for an automobile is an option that can be chosen in an auto insurance policy. Replacement cost for an automobile is a term of the policy, which must be negotiated as part of the insurance contract.Replacement Cost vs. Actual Cash ValueReplacement cost differs from the actual cash value of the automobile. Insurance companies also offer actual cash value policy terms for replacing an automobile, which will only pay what the automobile is actually worth after the amount of depreciation is determined.Collision InsuranceInsurance companies offer replacement cost terms in collision insurance auto policies. The policy will pay to replace your automobile at the current market price if it is destroyed in a collision.Comprehensive InsuranceInsuranc
