Actual cash value
The insurer pays the property’s value at the time of loss, accounting for age and wear. An eight-year-old television is paid as an eight-year-old television, not as a new one.
Replacement cost
The insurer pays the cost of replacing the item with an equivalent new one, with no deduction for wear. It is almost always the coverage to prefer, and it often comes as an endorsement rather than as standard.
The actual-replacement condition
Replacement cost is generally conditional on actually replacing the item, within a period set by the contract. If you do not replace it, the insurer pays actual cash value. Keep your replacement receipts.
Property excluded from replacement cost
Depending on the contract, some property stays settled at actual cash value: clothing in some cases, jewellery and furs above a cap, artwork, collections, or property already out of use before the loss.
Category sub-limits
Even under replacement cost, policies cap the payout by category: cash, jewellery, bicycles, computer equipment, collectibles. A valuable item is declared and insured by specific endorsement.
The check to make now
Pull out your declarations page and look for replacement cost on the building and on contents, separately. The two do not necessarily go together.
No rate, price, or recommendation on this page. Amounts and limits change: verify them with official sources before deciding.