ACTUAL CASH VALUE
The insurance company will investigate the damage to your assets and afterward deducts the expense of deterioration before offering you a claim. For instance, the TV you purchased for $800 five years back is just worth $300 today because of deterioration. This implies if a theft takes your TV and you document a claim for it, the insurance agency will repay you $300. Moreover, if you buy a similar TV that has been taken, it will be costly. In this way, the actual cash value will have to lower premiums than their counterparts.
Replacement cost is more expensive than actual cash value because it will pay out additional in case of the claim. For instance, you got your TV destroyed, your insurance company would replace it with a new TV with the same quality and size. Regardless of age, they can replace it. These insurance guarantees that you will get the full cost to really replace your assets. Replacement cost is more costly than actual cash value but offers significant serenity because it can replace your assets.