what s the difference between actual cash value and replacement cost 
if an insurer pays you the actual cash value for a claim the amount will be discounted or reduced to account for the wear and tear of the damaged item a process called depreciation conversely if your policy has replacement cost coverage you ll receive a claim payment for the items at today s current prices the bottom linewater damage insurance provides coverage to homeowners against certain forms of water damage most homeowners insurance policies may not cover water damage due to negligence poor maintenance or floods however if the water damage is due to a sudden accidental event insurance will likely cover the damage to the home examples of covered water damage can include burst pipes and toilet failures 