Actual cash value vs. replacement value (contents)

Actual cash value is the current market value of an item, taking age and wear into account. Replacement value is the cost of a comparable brand-new item. Budget contents insurance tariffs only pay the actual cash value — for a 5-year-old sofa that might be just 20% of the original price. Higher-quality tariffs with replacement value cover pay the full cost of a new equivalent item.