Replacement cost coverage is provided in both the broad and special form dwelling policies when what condition is met?

Replacement cost coverage is a significant aspect of both broad and special form dwelling policies, as it ensures that a policyholder can recover the cost of replacing damaged property without accounting for depreciation. The correct condition for replacement cost coverage to apply is that the amount of insurance must be at least 80% of the dwelling's replacement cost.

This requirement is put in place to encourage policyholders to insure their properties for a value that reflects the true cost of replacement. If property is underinsured, the insurance company may reduce the payout in the event of a claim. By maintaining coverage at or above this 80% threshold, policyholders can ensure they are fully protected against losses while also avoiding penalties related to the underinsurance of their property.

This coverage condition emphasizes the importance of regularly assessing the replacement cost of a dwelling, as market conditions and building costs can change over time. Ensuring that the insurance coverage meets this requirement helps safeguard the financial well-being of the policyholder against substantial losses.