Replacement Cost vs Actual Cash Value

What is replacement cost coverage and actual cash value?

Replacement Cost:  coverage is offered by most standard insurance policies issued to homeowners. This refers to the payment made by insurance company, to replace the home or repair the damages through materials of similar like and kind without depreciation deductions.Replacement cost coverage may also be included on the contents of the house.


So if contents are covered, it would be replaced with new items of similar like and kind at a reimbursement replacement cost basis.

Actual cash value: actual cash value refers to coverage wherein the home as well as contents are paid for with actual cash after deducting the depreciation amount.