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 16, 2017 New Haven, CT

Answer
Neil Richardson

Jun 16, 2017

There is a huge difference between the two valuation types when it comes to homeowners insurance. Replacement cost coverage means you would receive the amount of money it would take to replace your personal items (like a camera, for example) brand new. Actual cash value (sometimes written as ACV) means that the amount you receive for your personal items would take depreciation into account. Replacement Cost: 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: 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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