Actual Cash Value
Actual cash value is the replacement cost of repairing or replacing an item, minus depreciation and/or wear and tear.
Let's say your refrigerator is 7 years old .The average life expectancy is 14 years old,(sourcehttp://www.mrappliance.com/expert/life-guide/)
So your refrigerator has depreciated at least 50% (often more).
If you had a claim on that appliance it could go like this;
Side by side refrigerator with ice maker cost new $ 1,500.00
Less Depreciation - $750.00
Less Deductible - $1000.00
Equals no claim
Replacement cost is the amount of money it would cost to replace a damaged item with a new one at the time of the claim.
Side by side refrigerator with ice maker cost new $1,500.00
Less Deductible - $1,000.00
Claim Payment $ 500
Of course should you have a kitchen fire,(and I hope you do not), more items would be damaged, including damage to your home.
Which brings up a good point, what about Replacement Cost on my home?......
Stay tuned and find out.