R. Joseph Ritter Jr., Financial Advisor
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Actual cash value is the fair market value of the property today considering depreciation, age, etc. Replacement value is the amount it will cost to replace the property. For example, the ACV of a 15 year old refrigerator is minimal. Replacement cost is the price of a new, comparable refrigerator. ACV is determined by the property's age, condition and future useful life. Replacement cost will be the cost to replace a comparable item. Again using the refrigerator example, if you have a standard refrigerator with a freezer on top, insurance will pay to replace the refrigerator with a comparable new item, but it will not pay to buy a new side by side with lots of bells and whistles.
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