What is the difference between replacement and depreciated values?
Suppose that your old TV is stolen. A new one (replacement) may cost ten times more than the depreciated price of a used one. The choice is yours; it can be worthwhile to pay a higher premium in order to replace “used” with “new”. Regardless of your policy type, cash settlements are usually based on depreciated value. You must actually buy a new replacement article to receive replacement value from your insurer.