Which method of valuation does not account for depreciation?

The method of valuation that does not account for depreciation is Replacement Cost. This approach involves determining the cost to replace an asset with a new one of similar kind and quality without factoring in its current age, wear and tear, or depreciation.

In the context of insurance, Replacement Cost is essential as it ensures that policyholders can replace damaged property with new items at present-day market prices, regardless of the condition of the original items. This can provide greater financial recovery following a loss, as it eliminates the concerns about depreciation that can influence other valuation methods.

Actual Cash Value, on the other hand, does take depreciation into account by calculating the replacement cost minus depreciation, while Fair Market Value typically reflects the price that an asset would sell for on the open market, which can also involve depreciation considerations. Estimated Value is a less standardized metric that may or may not include depreciation based on the context, but it is not a widely recognized method comparable to Replacement Cost.