Insurance companies use one of two methods to determine the value of property: Replacement Cost and Actual Cash Value.

Replacement Cost
pays you the cost of replacing damaged property
no deduction for depreciation
maximum dollar amount


Actual Cash Value
pays you an amount equal to the replacement value of damaged property minus depreciation


Unless a policy specifically states that property is covered for its replacement value, coverage is for the lower, actual cash value. Check your policy, or ask your Insurance representative if you are not sure about your level of coverage.