With a replacement cost policy, you’d receive a compensation amount equivalent to the full cost of replacing the lost or damaged property with a brand new one. Actual cash value (ACV), which is about 10% cheaper, is the depreciated value or market price of the property at the time of loss. The extra premium for a replacement cost policy may be worth it if you’d prefer to get a brand new item rather than an old depreciated one just to save a few hundred dollars.