Kanetix Forum

What's the difference between `Actual Cash Value' and `Replacement Cost'. Is one better than the other when it comes to my home insurance?

- Actual cash value is the value of an item of property in its current state. Actual cash value includes depreciation.

- Replacement cost is how much it costs to replace an item of property with an item of similar quality. Depreciation is not a factor. This is also referred to as 'new for old'.

The majority of comprehensive policies include replacement cost on your building and contents. This coverage is always preferable to have as compared to actual cash value. It generally costs slightly more but it is worth the cost.

Sean Graham, Principal Broker at KTX Insurance Brokers.

Neither Kanetix® nor the KanetixForum.ca is an insurance broker or agent. Although this information has been passed along to you from KTX Insurance Brokers through the Forum, we are not responsible for the opinions expressed by them. Insurance can be complicated. When reading these answers, keep in mind each person¿s situation is unique. Individual responses may vary depending on your insurer, geographic location, and specific circumstances. If you have a similar situation, always speak with your insurance provider, or a licensed insurance representative, for terms and conditions that may apply to you.