For a claim exceeding $2,500 on the dwelling to be paid on a replacement cost basis under a homeowners policy, what must be completed?

In order for a claim exceeding $2,500 on a dwelling to be paid on a replacement cost basis under a homeowners policy, repairs must be completed. This requirement ensures that the policyholder actually restores the damaged property to its original condition, which is the fundamental intent behind replacement cost coverage. Replacement cost coverage is designed to provide sufficient funds to rebuild or repair the home without deducting for depreciation, but the insurer generally requires that repairs or replacements be made to fully realize this benefit.

While documentation, inspection, and evaluation are certainly important parts of the claims process, they do not specifically trigger the eligibility for replacement cost payment. Documentation supports the claim, an inspection confirms the damage, and an evaluation helps determine the value of the loss; however, the primary condition that must be met for a claim to be settled on a replacement cost basis, especially for larger claims, revolves around the actual repairs being undertaken. Thus, completing the repairs is crucial in facilitating the payment of the claim at replacement cost.