Choosing between market value and replacement cost significantly affects your insurance premiums. Market value coverage typically results in lower premiums because it factors in depreciation, meaning the insurer pays only what your home or belongings are worth at the time of loss, which is usually less than the cost to replace them. In contrast, replacement cost coverage leads to higher premiums since it covers the full cost to repair or replace damaged property with new items of similar kind and quality, regardless of depreciation. While replacement cost offers better financial protection and peace of mind, especially after major losses, it comes at a higher cost. Ultimately, the choice impacts both how much you pay monthly and how much you’d receive after a claim, making it a balance between affordability and comprehensive coverage. Homeowners prioritizing full recovery often choose replacement cost, while cost-conscious individuals may opt for market value coverage.