Replacement cost and actual cash value are two different ways to pay claims under homeowners insurance. Replacement cost coverage reimburses you for the full cost to replace damaged property with new items of similar kind and quality, regardless of the item’s age or depreciation. Actual cash value (ACV) reimburses you for the depreciated value of the damaged property, accounting for wear and tear. Learn how these coverage types work in North Carolina and which option is right for you.
Replacement cost coverage typically costs more in premiums but provides much better protection in the event of a loss. Most insurance professionals recommend replacement cost coverage for your belongings whenever possible, as it ensures you can truly replace what you’ve lost without bearing the depreciation burden yourself.
