Direct Answer
Replacement cost coverage pays to repair or replace damaged property at today’s prices, while actual cash value coverage subtracts depreciation for age and wear. Replacement cost generally provides better protection for homeowners.
What Replacement Cost Coverage Means
Replacement cost coverage pays for:
Rebuilding your home using current labor and material costs
Replacing damaged items without deducting for age
More predictable out-of-pocket costs after a claim
This option is usually recommended for homeowners who want stronger financial protection.
What Actual Cash Value Coverage Means
Actual cash value coverage:
Subtracts depreciation based on age and condition
Results in lower claim payouts
Can leave homeowners paying thousands out of pocket
This type of coverage is more common on roofs and older homes, even when the rest of the policy sounds comprehensive.
Why This Matters for Indiana Homeowners
With rising construction and labor costs across Indiana, actual cash value coverage can create significant gaps after a loss. Many homeowners don’t realize their roof or personal property is depreciated until they file a claim.
Soft CTA:
A local Indiana insurance broker can review your homeowners policy and explain whether your coverage pays replacement cost or actual cash value — before you ever need to use it.
