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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.


Links for IRMI Online Subscribers Only: CPI VI.F; PRMI 13.F

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