Suppose I have some property and want to insure it against fire. The purpose of the insurance is to let me get a new comparable sample of such property in case it is destroyed by fire.
The problem I see is the following.
On one side, if the piece in question is not new its market value is lower than that of the new equal or similar property, so if I insure it for the marker value and it is destroyed I won't get enough money to buy new one.
On the other side if I insure the property for the value of new sample I could be tempted to initiate a fire in some creative subtle hard-to-detect way so that I'm paid and can buy a new sample for replacement (in fact making the insurance company pay for renewal of my property).
How is this issue addressed in insurance? Is insuring for more than the property is currently worth allowed?