What methodology do adjusters often use to estimate repair costs?

Adjusters commonly use replacement cost valuation as the methodology to estimate repair costs because it reflects the current market price for materials and labor needed to repair or replace damaged property. This approach provides an accurate picture of what it would cost to repair or replace the property in question, without considering depreciation or other factors that may reduce the value of the property over time. By identifying the expenses associated with bringing the property back to its pre-loss condition, adjusters help ensure that claim settlements meet the true cost of restoration.

Unlike the actual cash value method, which deducts depreciation from the replacement cost to determine the payout, replacement cost valuation focuses entirely on the current costs without such adjustments. This makes it more straightforward for policyholders seeking to return their property to its original state. Adjusters prioritize replacement cost valuation because it aligns with property insurance policies designed to restore rather than compensate based on depreciated value.