Actual Cash Value vs Replacement Cost

There’s one last factor to consider with your renter’s insurance – actual cash value coverage vs replacement cost coverage.

Much like with auto insurance, actual cash value provides you with coverage of items based upon today’s market value. An old camera that has not been used much may still have a lot of life, but a low actual cash value today.

With replacement cost, your policy will reimburse you for the amount to replace the exact lost item. So an old camera with little use is worth more under replacement coverage vs actual cash value. While the premium for replacement cost is generally more, it makes it easier to replace your goods with brand new items.