What’s the difference between actual cash value and replacement cost value when it comes to your 
homeowners insurance?
As a homeowner, you know how important it is to get the right insurance to protect your home, your loved ones, and your belongings. However, with all the different coverage options out there, it can be difficult to select the right policies to meet your needs. For instance, many homeowners have trouble choosing between coverage options such as actual cash and replacement cost for their personal belongings. To help you make an informed decision, here are the major differences between actual cash value and replacement cost value policies.
Actual Cash Value
An actual cash value policy provides compensation for a covered item based on the items current value. This means that the item’s depreciation is factored in when determining the coverage amount. Because these policies offer less coverage, they tend to be more affordable when compared to a replacement cost policy. However, this limited coverage amount means that you might not actually be able to replace high-value items if they are stolen or damaged.
Replacement Cost Value
In comparison, replacement cost value policies offer coverage that will compensate you for the full value of a covered item. These policies do not factor in depreciation, essentially offering you coverage for a brand-new item regardless of how long the covered item has been in your ownership. Replacement cost values are generally set and agreed upon by all parties before a homeowners insurance policy is finalized. Because these policies offer more extensive coverage, they tend to be on the more expensive side. However, if you are insuring high-value items such as jewelry, fine art, electronics, family heirlooms, and so on, then getting a replacement cost value policy is highly recommended.
These are the major differences between actual cash and replacement cost value. If you need assistance with making this coverage decision or need assistance with other aspects of your homeowners insurance coverage, then don’t hesitate to contact the experts at VGW Walker Insurance in Texas. Our professional team is ready to get you the coverage that you need today.
