Replacement cost vs. actual cash value: what your inventory needs to show

Updated October 20, 2026

When you make a claim for your belongings, your policy pays on one of two bases: replacement cost or actual cash value. Which one you have changes what a claim pays, and what your home inventory needs to show. This guide explains the terms; your own policy decides how yours works.

Actual cash value

Actual cash value coverage pays replacement cost minus depreciation^[1]. The NAIC describes it as the fair market value of an item at the time of loss, which will usually be the cost to repair or replace it, less depreciation^[2].

Replacement cost

Replacement cost coverage pays to repair or replace damaged or destroyed belongings with items of like kind and quality, without a deduction for depreciation^[2].

How depreciation works

Depreciation is a decrease in value because of wear and age^[1]. The insurer works it out from the age and condition of the property^[3], which is why the age and condition of your belongings matter when you record them.

Replacement cost is often paid in two steps

Many policies only pay the actual cash value of personal property until you actually repair or replace it^[2]. In Texas, for example, you get two checks: the first for the actual cash value, and the rest after you've replaced the item^[1]. There can be a time limit. In California, you have at least 12 months from the first payment to collect the full replacement cost, or at least 36 months after a declared state of emergency^[4].

Valuables have limits

Almost all policies include specific dollar limits on particularly valuable property, such as jewelry, art, silverware, antiques, computers or firearms. You can often buy more coverage, but you may need to list those items for your insurer^[2]. United Policyholders notes that some items, such as antiques, collectibles, fine china, sterling silver and precious metals and stones, are typically not depreciated^[5].

Flood insurance works differently

Under a National Flood Insurance Program policy, claims for personal property are always paid at actual cash value^[6].

Where to find which one you have

The declarations page, the first page of your policy, summarizes your coverages, limits and deductibles^[1], and may show whether your belongings are covered at actual cash value or replacement cost^[3]. If it isn't clear, ask your insurer or agent.

What your inventory needs to show

Because value depends on age and condition, record for each item:

• When you bought it, the month and year if you can^[5].
• Its condition.
• What you paid, and what it would cost to replace today with something of like kind and quality.
• Its brand, model and serial number^[1].
• An appraisal for anything particularly valuable.

How ii360 helps

ii360 gives each item in your inventory an estimated replacement cost, based on what it can see in your video. Prices you say out loud while recording are used as you said them, and you can enter your own figure and its source at any time. Each item also has room for its brand, model, serial number and notes, such as when you bought it and its condition.