Actual cash replacement is an amount that an insurer will pay you as a result of your claim that reflects NOT AN INITIAL BUT A CURRENT VALUE of your property / belongings. It will typically reflect depreciation and thus if you, let’s say, purchased a laptop for $2,000 and it was damaged during a fire two years later, you will not receive $2,000, but a fair price for a similar laptop which is two years old.
Insurers might use different proxies to determine an actual cash replacement, so it is in your best interest to have a good understanding of the value of your properties / belongings. You should not mix actual cash value to replace an item with replacement cost value which, pays the full price buying a similar item today and does not consider depreciation.
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