To qualify for replacement cost coverage, the insured under a property insurance policy must carry insurance equal to a specified percentage of what?

To qualify for replacement cost coverage, the insured must carry insurance equal to a specified percentage of the property's value, which is often defined as the cost to replace the property with similar materials and craftsmanship without deducting for depreciation. This ensures that the policyholder is adequately covered in the event of a loss, allowing them to rebuild or replace the damaged property to its original condition.

In many insurance policies, this requirement aims to prevent underinsurance, where the amount of coverage is insufficient to cover the costs of replacing the insured property in full. The property's value as defined in this context refers specifically to its replacement cost, rather than its market value, purchase price, or tax assessment value, making it essential for the insured to understand how replacement coverage works to ensure they comply with the policy requirements.