Here’s how actual replacement cost and actual cash value work.  
 
Replacement cost. If you have a claim and decide to repair or replace your lost or damaged property, we’ll cover this without any deduction for depreciation (wear and tear from its use), subject to your global limit. For example, if you lose a five-year-old television in a fire, it’ll be replaced with a new TV of like kind, quality and usefulness.  
 
Actual cash value. If you have a claim and decide not to repair or replace your lost or damaged property, we can pay you cash for the depreciated cost of the item, taking into consideration its condition at the time of loss. For example, if you had a bicycle that was 10 years old, we’d price it based on its age and condition. With actual cash value, you won’t receive sufficient funds to purchase a new bicycle of the same value, you’ll only receive its depreciated value due to normal wear and tear.