Actual cash value vs replacement cost.

The basic difference

Replacement cost generally refers to the cost to repair or replace damaged property with similar materials without deducting for depreciation. Actual cash value generally reflects depreciation. The exact policy language controls.

Why renewal shoppers miss it

A new quote may lower premium by changing settlement terms. If a roof moves from replacement cost to actual cash value, the lower price may come with a larger surprise after a wind or hail claim.

What to ask

• Are roof losses settled at replacement cost or actual cash value?
• Does roof age change settlement?
• Are cosmetic damage, matching, code upgrades, or ordinance costs limited?
• Is replacement cost paid up front or after repairs and receipts?

Sources

Arizona DIFI explains replacement cost as a key policy term, and New York DFS describes policy types and exclusions. Review Arizona DIFI homeowners insurance and NY DFS choosing a policy.