Actual Cash Value (ACV)

Actual Cash Value is the amount an insurance company will pay to repair or replace damaged property, minus depreciation. This means they subtract value for wear and tear or age of the item. For example, if your 10-year-old roof is damaged, the payout may be based on the current value of a 10-year-old roof, not the cost of a new one. ACV generally results in lower premiums but higher out-of-pocket costs after a loss.

Replacement Cost

Replacement Cost refers to the amount it would take to replace or repair your home or belongings at today's prices, without deducting for depreciation. This means you would receive enough money to replace items with new ones of similar kind and quality. It usually costs more in premiums but provides better protection because you’re more likely to recover your actual loss.

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