REPLACEMENT COST.
Actual cash value (depreciated value) is the default valuation method on business and personal property coverage form because it compensates the insured for what is actually lost. However, it is usually difficult to replace old goods with old goods! Replacement cost allows the insured to replace old goods with new. However, when this option is chosen, the limit of insurance purchased must reflect the replacement cost values and this can lead to a substantial increase in premium.