On what basis will a claim be settled if the insured has a dwelling flood form and experiences damage?

The correct basis for settling a claim under a dwelling flood form is replacement cost. This means that if damage occurs to the property, the insurance will cover the cost of repairing or replacing the property with materials of like kind and quality, without deducting for depreciation. This is a critical consideration for policyholders, as it ensures that they can rebuild or repair their home to its original state, rather than receiving a lower payout based on the actual cash value, which would account for depreciation and result in a lower compensation amount.

Replacement cost is particularly beneficial for homeowners as it helps them to recover their financial losses more effectively, allowing them to complete necessary repairs or rebuild their property without having to cover additional out-of-pocket expenses that might be necessary if only actual cash value was considered. This is crucial in maintaining the standard of living and ensuring that homeowners can return to their pre-loss conditions following a covered flood event.