Replacement Cost vs. Actual Cash Value

Home insurance policies use different methods to calculate payouts for damage to your property or belongings:

Replacement Cost Coverage:

• Pays to replace or repair your property at current market rates, without factoring in depreciation.
• More expensive but ensures you can replace items at full value.

Actual Cash Value (ACV) Coverage:

• Pays the depreciated value of the item (i.e., what it’s worth at the time of loss).
• Lower premiums but may not cover the full cost to replace older items.