What percentage of original value must a property be insured for under Replacement Cost coverage?

Under Replacement Cost coverage, a property must be insured for at least 80% of its original value. This requirement is established to ensure that in the event of a total loss, the insured amount will be sufficient to cover the cost of replacing the property with a new one of similar kind and quality, without depreciation being taken into account.

This 80% threshold acts as a minimum to ensure that property owners have adequate coverage and helps mitigate the risk of underinsurance. If a property is insured for less than 80% of its value, any claim made may result in a penalty, reducing the payout proportionately based on the amount of insurance relative to the actual replacement cost of the property.

The other percentages provided are not standard requirements for Replacement Cost coverage. For instance, insuring at 100% or beyond could be unnecessary as it exceeds the minimum baseline needed to secure proper coverage, while 50% does not meet the necessary threshold to provide adequate protection.