Under which condition would a policyholder most likely receive a replacement of damaged property instead of cash value?

A policyholder is most likely to receive a replacement of damaged property instead of cash value when the coverage is written on a Replacement Cost basis. This type of coverage means that the insurer agrees to pay for the cost to repair or replace the property with a new item of similar quality and functionality, without deducting for depreciation. This is particularly beneficial for the policyholder, as they will receive the full amount necessary to replace the damaged item.

In contrast, Actual Cash Value coverage, which involves depreciation, would provide the policyholder with only the depreciated value of the damaged property, not funding for a complete replacement. The amount of the deductible does not directly influence whether the payment will be cash value or replacement cost; it simply affects how much the policyholder must pay out of pocket at the time of a claim. Similarly, the monetary threshold of a claim, such as being less than $500, does not inherently change the nature of the coverage type, thus it doesn't affect what the policyholder would receive in terms of replacement versus cash value. Therefore, having coverage on a Replacement Cost basis is the defining factor for receiving property replacement rather than its cash value.