What is the difference between replacement cost and actual cash value coverage?

Replacement cost coverage pays what it costs to rebuild or replace damaged property. Actual cash value pays the property's current value after subtracting depreciation, so it usually pays less on older items. The National Association of Insurance Commissioners (NAIC) says a standard homeowners policy typically covers the dwelling, other structures such as sheds or fences, personal belongings, and liability. Flood and earthquake damage are generally excluded and need separate policies. The deductible is the part of each loss you pay yourself. TDI lists choosing between replacement cost and actual cash value as one of the key questions to ask when insuring a manufactured home. Policy wording varies by company, so read the declarations page before buying.

Sources

• Homeowners InsuranceNational Association of Insurance Commissioners
• How to get insurance for a manufactured homeTexas Department of Insurance