Batavia, Ohio

What Is the Difference Between Actual Cash Value & Replacement Cost? August 30, 2019

Batavia, Clermont
What Is the Difference Between Actual Cash Value & Replacement Cost?, Batavia, Ohio

Preparing to purchase a new house is an exciting venture. During the process, one of the factors you’ll need to consider is purchasing a home insurance policy. When you invest in this coverage, one factor you’ll likely hear a lot about is actual cash value and how it compares to replacement costs. The following guide explains what these two terms mean and how they differ, so you can move forward with a better understanding of what lies ahead. 

What Do the Two Terms Mean?

Actual cash value refers to what is considered the market value of your property at the given time of a claim. This term takes factors like age and depreciation into consideration when figuring out the final bottom number.

home insuranceReplacement cost, on the other hand, is not always the same. This term solely focuses on what the total amount needed is to restore your property to the condition it was originally in prior to any damage. Unlike actual cash value, this term does not take factors like depreciation into consideration when coming up with a final number. 

How Do These Terms Impact Your Home Insurance Policy?

Although they may seem similar, actual cash value and replacement costs can vary widely. In most cases, you’ll want to opt for the actual cash value of whatever property was damaged —this ensures you’ll receive all of your investment back in the event of damage. However, if the damage is only cosmetic or minor, opting for the replacement cost may suffice to restore your home back to its original state. 


When it comes to investing in home insurance, the team at Kramer-Myers & Werring-Dickerson Insurance is here to ensure complete coverage. Based in Batavia, OH, these professionals have close to 60 years of experience providing clients with the guidance and expertise needed to craft the perfect policy. Visit their website for more information on their offerings, and call (513) 732-1461 to schedule a consultation for home insurance today. 

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