The Difference between Replacement Coverage & Actual Cash Value on Home Insurance

Replacement cost value is the amount it will take to replace your property or belongings without any deduction for depreciation. This is the best option to know all your belongings are fully covered if something were to happen. If the price is too high for clients to get Replacement coverage, you can always look at changing the deductibles to make It more affordable. Most all companies offer “extended replacement coverage” on top of the dwelling amount. So in some cases you can have your home insured for $300,000 and then the company will offer extended coverage of 25% which would be an additional $75,000 in coverage if needed. RCV offers the best coverage and if you are unsure what your Home Insurance offers, check with your Agent to make sure you are covered correctly.

Actual cash value is the replacement cost value, minus depreciation. Age and wear and tear are some of the main factors in calculating a covered item’s depreciation. Insureds sometimes are interested in this coverage if they are looking for the cheapest option possible. Agents will always recommend Replacement coverage but Actual Cash Value is always an available option if the insured is interested in It.