Bharti AXA INSURANCE GLOSSARY Extended Replacement Cost Coverage Typically, an insurance policy would cover an asset up to its depreciated value. For example, if one buys a computer for ₹50,000, its value after a year maybe only ₹30,000 – and in case of the total loss of the computer at this point in time, the insurer will only provide a compensation of ₹30,000. This amount may not be sufficient to get a replacement computer, as the replacement cost is still ₹50,000. A way around is to get an insurance cover on replacement cost basis. With such a policy, the insurer would pay whatever the replacement cost for the asset insured would be in case of a total loss. The problem with Guaranteed Replacement Insurance Policies is that the premiums would be forbiddingly high. This is because the exposure that the insurer has is unlimited, and is based on the current price of the replacing the insured asset. Extended Replacement Cost Coverage allows for a compromise. It can be bought as an add-on cover with the asset insurance policy and pays the replacement cost up to a fixed percentage of the depreciated value of the asset. The cap is typically set at 120% to 125% of the depreciated value. This allows the policyholder to get higher coverage at a reasonable price. Request Call Back Category * - Select -CarTwo WheelerHealthTravelPersonal Accident Buy Renew Claim submit Related Posts Disclaimer : The information published on this website is for the public's reference only. Content of this information is to provide an overview of your Travel needs and should not be relied upon for personal, medical, legal or financial decisions and you should consult an appropriate professional for specific advice. Bharti AXA General Insurance Company Limited makes no representations about the suitability, reliability, timeliness, and accuracy of the information, travel, services, or any other items mentioned on this subject for any purpose whatsoever.