Whats the difference of replacement cost policy in lieu of a functional replacement cost policy for a building that is on the National historical register?
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A replacement cost policy for an old building will be the cost to rebuild it with period-accurate materials. So for a very old home, that’ll likely mean no drywall, no fiberboard for cabinets and moldings, no aluminum gutters, etc. A *functional* replacement cost policy would be the cost to build an equivalent home, but with modern materials and techniques. So if your 1920’s Tudor home burns down, a *functional* replacement cost policy would replace it with a modern equivalent – a replacement cost policy (no functional) would try to rebuild a copy of the Tudor home.
A functional replacement cost policy would be significantly cheaper – modern materials are cheaper and more easily sourced, you don’t need specialized contractors, and it’s usually much quicker to build. It just won’t look much like the original building, because it would be built in a more modern way. So the replacement value will be lower, and the policy will have a much cheaper premium for the homeowner.
But if someone really loves the old-timey charm of their building, they might want to pay extra for the replacement cost policy, so that if anything bad happens, the damage would be fixed or replaced with as exact a copy as possible. This tends to be *much* more expensive, because it’s a bigger insurance risk, but for someone who buys a historical building, the materials and style are likely a huge part of its appeal.
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