Cover that restores the depreciation deducted, within a cap and subject to actual rebuilding, as a deliberate departure from the indemnity principle.
Replacement cost cover pays the policyholder a supplement equal to the depreciation that had been deducted, so that they can actually replace what they lost. It is a deliberate departure from the indemnity principle, which in principle bars compensation exceeding the loss, and the law admits it only with two safeguards. The first is a cap, usually expressed as a percentage of the actual cash value indemnity, which prevents rebuilding as new a building three quarters written down. The second is a condition of actual reinstatement within a set period, often two years, checked against invoices: the supplement is paid only if the property is genuinely restored, which rules out pocketing the difference and rebuilding nothing. The problem solved is the practical dead end of the indemnity principle applied alone, which leaves a claimant unable to regain the use of their property with the money they receive, since the market offers no equivalent secondhand.
The indemnity principle was laid down in France by the insurance contract act of July 13, 1930, now article L. 121-1 of the Insurance Code: compensation may not exceed the value of the thing at the time of the loss. Replacement cost cover departs from it within a contractual limit commonly set at 25% of the actual cash value indemnity, and conditional on rebuilding carried out within two years.
garantie valeur à neuf, rachat de vétusté