What is the difference between actual cash value and replacement cost?

If you have replacement cost coverage on either your dwelling or your personal belongings, in the event of a covered loss you would be reimbursed for the cost you incur to replace your damaged property, or items, brand new. If you were to have Actual Cash Value, this means you would be paid the current replacement cost of whatever you lost, minus depreciation. (Depreciation usually means the estimated wear and tear). In either case, the actual total amount you are reimbursed is subject to the terms and conditions of your particular policy, including deductibles and coverage limits.