Replacement cost means your stolen or destroyed property is valued at the amount it would take to replace it with a new version. So, if your sofa is destroyed, you're paid the amount it costs to purchase a new sofa of the same or similar model. Actual cash value means your property is valued including depreciation. In the previous scenario, you may only receive 50% of the cost to purchase a new sofa, since your destroyed sofa already had a few years of use. It's important to understand how your policy values your personal property so you aren't surprised when you need to make a claim.