Which statement regarding the Basis of Claim Payment for Homeowners Forms is FALSE?

The assertion that Replacement Cost includes increased costs due to by-law enforcement is inaccurate. In homeowners insurance, replacement cost coverage is generally intended to cover the cost to replace the damaged property with similar property at current market prices without depreciation. However, it typically does not cover additional costs incurred due to changes in building codes or local by-law enforcement that arise after the initial construction. This means that if repairs or replacements must be made to comply with updated regulations, those costs may not be included in the standard replacement cost coverage.

Understanding the distinction between replacement cost and by-law enforcement coverage is essential. While homeowners insurance may provide funds to replace property, any additional expenses due to compliance with new laws or regulations often require separate coverage options. In contrast, the other statements accurately reflect the typical terms and conditions found in homeowners insurance policies regarding the basis of claim payment.