Actual cash value or replacement cost?
An actual cash value (ACV) plan will pay out the value of items at the time they were damaged (and the claim was made). However, an ACV plan will assess value with depreciation as a factor, which means the pay-out for the claim is unlikely to cover the total cost of lost or damaged items. For example, if a three-year old TV is lost, the insurer will pay out for what it is worth now, not its cost as new. This is unlikely to cover the price of buying a new TV.
Replacement cost plans do cover full reimbursement for the full value of lost or damaged items. Using the TV example, the insurer would replace the TV for one that is of same make and quality (if possible), which means with a good replacement cost plan, customers can get all their lost or damaged items fully replaced.