Definition. 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.Similarly, what is functional replacement cost insurance?
Definition. Functional Replacement Cost — the cost of acquiring another item of property that will perform the same function with equal efficiency, even if it is not identical to the property being replaced.
Beside above, what is modified functional replacement cost? The coverage A limit of liability is chosen based on "functional replacement cost," that is, the amount it would cost to repair or replace using materials that are functionally equivalent to obsolete, antique, or custom methods and materials.
Also to know, what is functional replacement cost loss settlement?
"Functional replacement cost" means the amount which it would cost to repair or replace the damaged building with less costly common construction materi- als and methods which are functionally equivalent to obsolete, antique or custom construction materials and methods used in the original construction of the build-
What does building functional value mean?
Functional Building Valuation This is an optional method of settling a covered property loss. With this endorsement, a loss would be settled on the basis of the cost to replace the damaged building, in the event of a total loss, with a less costly building that is functionally equivalent to the damaged building.
Which is better actual cash value or replacement cost?
Payment based on the replacement cost of damaged or stolen property is usually the most favorable figure from your point of view, because it compensates you for the actual cost of replacing property. Actual cash value is equal to the replacement cost minus any depreciation (ACV = replacement cost – depreciation).What does guaranteed replacement cost mean?
Guaranteed Replacement Cost — a property insurance valuation option found in some homeowners policies. The policy pays the full cost of replacing the home even if this amount exceeds the policy limits. The provision helps the insured avoid being underinsured in the event of a total loss.What does extended replacement cost mean?
Extended replacement cost refers to an insurance policy that usually provides a benefit over and above the limits specified by the policy for replacing a damaged house. This coverage could pay a benefit ranging from approximately 120 to 125 percent.What is agreed value?
Understand the Agreed Value Option As its name suggests, agreed value is a property value that you and your insurer agree upon at the beginning of your policy period. If a loss happens, your property will be assessed based on the agreed-upon value as long as you have insured your property for that amount. 
