As an Insurance Advisor it’s my job to discuss with people the levels of Insurance coverages available. During this discussion the difference between Actual Cash Value and Replacement Cost comes up.
It’s possible and probable that the difference between Actual Cash Value and Replacement Costs can be in the thousands of dollars. That’s why its important to know and understand what coverages you have and if you have an ACV or Replacement cost policy.
“Actual Cash Value” (ACV) sometimes referred to as “Market Value” is calculated by subtracting deprecation from the replacement cost value. “Replacement Cost Value” (RCV) is the actual amount at the present time that it would take to replace something.
If you have a covered personal property loss and you don’t have Personal Property Replacement Cost, you can except the insurance company will depreciate the value and give you the actual cash value of your stuff. You might be surprised on how quickly your stuff depreciates after you buy it.
For example, kitchen appliances, the cost new of a refrigerator, stove, dishwasher and microwave can easily total more than $5,000. However, these items second hand (depreciated) can be acquired for less than half that amount.
Take time to make sure you have the coverage you want in the event of bad things happening. This is easily done by consulting your agent or me. Being “Insured” and having the “Proper Coverage” are two different things and I’m happy to help you make sure you have the coverage you need and the service you deserve.