Reproduction Cost

AAA

DEFINITION of 'Reproduction Cost'

The costs involved with identically reproducing an asset or property with the same materials and specifications as an insured property based on current prices. Insurers use reproduction cost as a method of valuation to calculate the costs involved with the risk of replacing an insured asset with an identical one at the same location.

Reproduction cost looks at the cost of creating an exact replica, and should not be confused with replacement cost, which looks at the cost of replacing an insured property with one of similar functionality.

INVESTOPEDIA EXPLAINS 'Reproduction Cost'

Different insurance contracts will insure for a different cost. While some insurers will pay out an amount to purchase a similar asset of same functionality; others will pay out an amount to purchase an identical property. Because these amounts can differ greatly, it is important to know the terms in your own insurance contracts.

RELATED TERMS
  1. Production Externality

    Costs of production that must ultimately be paid by someone other ...
  2. Asset

    1. A resource with economic value that an individual, corporation ...
  3. Replacement Cost

    The cost to replace the assets of a company or a property of ...
  4. Replacement Risk

    The risk that a contract holder will know that the counterparty ...
  5. Property

    1. Anything over which a person or business has legal title. ...
  6. Insurance

    A contract (policy) in which an individual or entity receives ...
Related Articles
  1. Insurance

    Understanding Your Insurance Contract

  2. Home & Auto

    The Beginner's Guide To Homeowners' ...

  3. Home & Auto

    Exploring Advanced Insurance Contract ...

  4. Markets

    Company Clone Cost Reveals True Value

Hot Definitions
  1. Capitulation

    When investors give up any previous gains in stock price by selling equities in an effort to get out of the market and into ...
  2. Turkey

    Slang for an investment that yields disappointing results or turns out worse than expected. Failed business deals, securities ...
  3. Conduit Issuer

    An organization, usually a government agency, that issues municipal securities to raise capital for revenue-generating projects ...
  4. Financing Entity

    The party in a financing arrangement that provides money, property, or another asset to an intermediate entity or financed ...
  5. Hyperinflation

    Extremely rapid or out of control inflation. There is no precise numerical definition to hyperinflation. Hyperinflation is ...
  6. Gross Rate Of Return

    The total rate of return on an investment before the deduction of any fees or expenses. The gross rate of return is quoted ...
Trading Center