Which method of calculating value does not consider depreciation?

Replacement Cost is a method of calculating value that focuses on the cost to replace an asset with a new equivalent at current market prices, without taking into account any depreciation. This approach estimates the amount it would cost to replace a damaged or destroyed item as if it were new, reflecting current costs of materials and labor, rather than the asset’s current market value after accounting for wear and tear.

In contrast, other methods such as Functional Replacement might adjust for improvements or changes, Market Value typically reflects what the property would sell for in the current market, which inherently considers depreciation, while Agreed Value involves a predetermined value agreed upon by the insurer and the insured, which may also have considered depreciation in its establishment. This makes Replacement Cost unique in its focus on the current expense of replacement regardless of the asset's age or condition.