Which endorsement would have to be attached to a policy for loss settlement without depreciation?

Which endorsement would have to be attached to a policy for loss settlement without depreciation?

• A. Rebuilding clause
• B. Extended coverage endorsement
• C. Loss clause
• D. Replacement cost endorsement

Answer: (D)

When settling a loss, paying without depreciation means you want the amount to reflect the full cost to replace the damaged property with new material of like kind and quality, rather than its depreciated value. The endorsement that guarantees this is the replacement cost endorsement. It adjusts settlement to the current replacement cost, up to the policy limits, often with a requirement that the property be insured to its replacement cost and that you actually replace the item. The other endorsements serve different purposes—rebuilding on the same site is about where/how you rebuild, extended coverage adds extra perils, and a loss clause doesn’t specifically address depreciation in settlement.

When settling a loss, paying without depreciation means you want the amount to reflect the full cost to replace the damaged property with new material of like kind and quality, rather than its depreciated value. The endorsement that guarantees this is the replacement cost endorsement. It adjusts settlement to the current replacement cost, up to the policy limits, often with a requirement that the property be insured to its replacement cost and that you actually replace the item. The other endorsements serve different purposes—rebuilding on the same site is about where/how you rebuild, extended coverage adds extra perils, and a loss clause doesn’t specifically address depreciation in settlement.