Do you know the difference between Actual Cash Value and Replacement Cost Value? If you don’t, you are not alone in this. Homeowners policies offer either actual cash value or replacement cost to replace damaged, destroyed or stolen personal property. Both actual cash value and replacement cost will pay out less your policy deductible if not previously met. Here is a quick comparison of the two.
Actual Cash Value (ACV) is what the personal property is worth at the time of theft, damage or destruction less depreciation and policy deductible if applicable.
Replacement Cost Value (RCV) is what the personal property would cost today brand new less your policy deductible if applicable.
When looking over your homeowners policy see which coverage is better suited for your needs. An ACV policy may be a smaller premium but there may be a higher risk when it is time to file a claim. An RCV policy may have a higher premium but will be able to offer the peace of mind if your home and personal property are completely destroyed and need to be replaced and/or rebuilt. Below is a claims scenario showing the difference between ACV and RC.
When you are reviewing your current policy give us a call and one of our Personal Lines Account Managers will be more than happy to go over your coverage with you. Stop by one of our offices or give us a call if we can help in any way.
By: Jen Tighe