Replacement cost is the full cost to replace a covered item at today's prices and without depreciation. An actual cash value settlement basis means that the insurer calculates depreciation and reimburses the policyholder only for the depreciated value of the items. So if the policyholder's home has a power surge and their 100" projection television is fried, they could be paid out the full cost to replace the TV—or could be given the amount that the TV would fo for on the market. Many companies will pay actual cash value, but only after the personal property is replaced or repaired—which means the upfront costs are out-of-pocket for your clients.