Replacement cost vs actual cash value
The single setting that decides how much your claim actually pays.
A quick example
Say a covered loss destroys a 10-year-old roof. Under replacement cost, the policy pays for a new roof (subject to your deductible). Under ACV, it pays for a 10-year-old roof - the depreciated value - leaving you to cover the large gap. The same logic applies to belongings, appliances, and vehicles.
When ACV shows up
Some policies, especially basic dwelling fire (DP-1) forms and certain older-home or high-hazard policies, are written on an ACV basis. It is important to know which basis your policy uses before a loss, not after.
How to choose
For most homeowners, replacement cost on both the dwelling and personal property is worth the modest extra premium. We will show you the difference in cost and in claim outcome so you can decide with eyes open.
Frequently asked questions
Is replacement cost worth the higher premium?
Usually yes. The premium difference is modest, but at claim time replacement cost pays for new equivalent items while ACV deducts depreciation, which can leave a large out-of-pocket gap.
How do I know which one my policy uses?
Check your declarations page or ask your broker. Some basic and high-hazard policies default to actual cash value, so it is worth confirming before a loss occurs.
Does actual cash value apply to cars too?
Yes. Auto physical damage claims are typically settled at the vehicle's actual cash value, which is why gap coverage matters if you owe more than the car is worth.
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