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Property & casualty
Replacement cost pays what it takes to repair or replace damaged property with new property of like kind and quality. Actual cash value pays replacement cost minus depreciation, so an older roof or ten-year-old furniture returns much less. The settlement basis can matter as much to a claim payment as the limit itself.
Many policies mix the two: replacement cost on the dwelling, actual cash value on an older roof or on personal property unless an endorsement is added. Some replacement cost settlements pay depreciation only after repairs are completed. Clients rarely know which basis applies until they read a claim check.
This distinction is one of the clearest ways a producer can add value over a price-only comparison. When a property lead arrives, the question of how claims would be settled is worth raising before any discussion of premium.
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