Jargon, Busted: Actual Cash Value vs. Replacement Cost

Watch this video to learn the difference between actual cash value and replacement cost.

What’s the difference between actual cash value and replacement cost when it comes to home insurance? While these are two terms that may seem similar, they are actually quite different. Let us break it down for you.

Replacement cost is the dollar amount you would need to replace your property today with one of the same like, kind and quality. Actual cash value, on the other hand, is the replacement cost minus depreciation of your property.

Let’s say your roof needed to be reshingled after a storm. Actual cash value would take the age of your shingles into account when calculating the amount of your reimbursement. However, replacement cost would cover the full cost of reshingling your roof, regardless of the age of your shingles.

While they may seem similar, these two insurance terms result in significantly different outcomes. Talk to an Amica representative – we’re here to help you have a great experience.