What is the difference between replacement value and market value for insurance?

Replacement value is generally what it would cost to replace an item with a comparable one, often at retail, within a reasonable time. Market value, sometimes called fair market value, is generally what a willing buyer and willing seller would agree to, such as a price at auction or a private sale. For many antiques and jewelry pieces, replacement value is higher than what you would get selling the item.

That is why an insurance appraisal often shows a higher number than an estate or resale appraisal for the same piece. Each figure is meant for a different purpose, so make sure your appraiser knows why you need the appraisal.

Insurers may pay claims on a replacement cost basis, an actual cash value basis that accounts for depreciation, or an agreed value for scheduled items. Ask your agent which applies to your policy, because the definitions and terms vary by insurer and state.