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Difference Between "Actual Cash Value" and "Replacement Cost"

By May 13, 2011June 8th, 2020Insurance






The difference between the two is the depreciation. However, both is still valued at the today cost of replacing the damaged property with new property. Generally, replacement cost is the ideal figure in the insured’s position. If you have a CD player or video camera that was stolen, you would want the full reimbursement of replacing that CD player or video camera. However, for Actual Cash Value, the fact that the CD player or video camera has been used, the insurer would take into consideration the wear and tear that the item has endured, thus, replacement cost value minus depreciation.

You want to make sure you know what your homeowners insurance has. You want to avoid any unpleasant surprises especially at a time of a claim. Speak to one of our knowledgable agents for any questions regarding homeowners, auto, or even business insurance! 

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