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

When a claim is settled under a dwelling flood form, it is based on the replacement cost. This means that the insurance will cover the cost of repairing or replacing the damaged structure without any deduction for depreciation. This approach ensures that the insured is adequately compensated for the full value of their loss, enabling them to restore their property to its original condition without incurring additional out-of-pocket expenses.

Replacement cost coverage is particularly advantageous because it helps the policyholder rebuild or repair at today's prices, which can be significantly higher than the original cost due to inflation or changes in the construction market. This method aligns with the fundamental purpose of insurance, which is to restore individuals to the financial position they were in prior to their loss. In contrast, other methods like actual cash value would deduct depreciation, thereby providing a lesser amount for the claim.