Replacement Value refers to the cost of replacing an item with a new one of similar quality, style and condition. This term is often used in insurance policies where the coverage is based on the replacement value of the items being insured rather than their actual cash value or purchase price. In other words, if your property is lost, damaged or stolen, the insurer will pay you the amount it would cost to buy a new one, instead of reimbursing you for the depreciated value of the item.