What is the difference between actual cash value and replacement cost in property coverage?

Actual Cash Value: Pays the depreciated value of damaged property. Replacement Cost: Pays the cost to replace the property without depreciation deduction.

Actual cash value considers depreciation when reimbursing for damages, while replacement cost provides the amount needed to replace the damaged property without factoring in depreciation.

After a storm destroys office equipment, the business owner receives reimbursement for the replacement cost under their BOP’s property coverage.

Establish a process for filing BOP claims, including documenting losses and maintaining communication with your insurer.