In Sally's scenario with her roof, what would the Replacement Cost policy payout be after the hailstorm damage?

In the context of a Replacement Cost policy, the payout after a hailstorm damage would be based on the current cost to replace the damaged roof with a new one, without depreciation being factored into the settlement. This type of policy ensures that the insured receives the full amount necessary to cover the replacement of their damaged property, using materials that are of similar kind and quality.

If Sally's roof was valued at $12,000 for a full replacement based on current market prices, the payout would equate to that figure, as the insurance company would reimburse her for the cost to restore or replace the roof to its pre-damage condition. This means that in the event of such significant damage from a hailstorm, the insured would not incur any out-of-pocket expenses beyond the deductible amount defined in her policy.

In this case, the correct answer reflects the understanding that the Replacement Cost policy offers coverage without depreciation, ensuring Sally receives $12,000, which is the necessary amount to replace her roof.