Whats the difference between actual cash value and replacement-cost coverage?
If the policy indicates that settlement will be on a replacement-cost basis, then payment will be made for the actual cost, at today’s prices, to repair or replace, limited only by the total amount of coverage that was purchased. If the adjustment basis is actual cash value, settlement will be made by determining the replacement cost at today’s prices, less a reasonable amount for depreciation, age, or obsolescence. Some policies provide coverage for the home on a “guaranteed replacement cost” basis, in which case the carrier pays whatever it costs to repair or rebuild the home, regardless of policy limits.
