Replacement Cost
Categories: Accounting
Important accounting term. And one for insurance companies.
You drove Betsy, a 14-year-old Jeep. One day, she was stomped on by Godzilla and there was nothing left. You don't want a new car; you want Betsy. She carried the smells of some 40 dates in there, and many had sweet memories for you. There is no way to replace a 14-year-old Jeep, especially not Betsy.
So the insurance company likely just gives you the equivalent money that they think would replace Betsy. The Blue Book says she's worth $11,325. A lifetime of dreams for 11 grand and change; that's what the insurance says the replacement of Betsy is worth.
How many roads?
