What is the difference between replacement cost and actual cash value?
Replacement cost pays to replace your damaged property at current prices without deducting for depreciation. Actual cash value pays the depreciated value. Replacement cost coverage costs more but pays significantly more when you file a claim. Most standard policies offer replacement cost for the home structure.
Why It Matters
Choosing the right valuation method can mean the difference between full replacement and receiving far less than you expected after a loss.
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