Question

What is the difference between actual cash value and replacement cost coverage?

I'm shopping for homeowners insurance and I have seen quotes that cover my personal property in two different ways; actual cash value and replacement cost. Which one should I choose?

Jun 15, 2017 New Haven, CT

Answer
Neil Richardson

Jun 15, 2017

There is a huge difference between the two valuation types when it comes to homeowners insurance. Let's use an example of a camera.

  • Replacement cost coverage means you would receive the amount of money it would take to replace your personal items brand new. If your 2-year old camera is stolen then you would receive the amount necessary to replace the camera with a brand new version.
  • Actual cash value (sometimes written as ACV) means that the amount you receive for your personal items would take depreciation into account. If your 2-year old camera is stolen then you would receive an amount based on the age of your camera. 

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