Actual Cash Value vs. Replacement Cost

Actual Cash Value vs. Replacement Cost

Your homeowners’ insurance policy is vital in keeping your home safe day after day! Chances are, when you purchased your homeowners insurance policy you were simply going through the motions because you were so excited to finally move into the home of your dreams. However, this may mean that you are unaware of the exact coverage you hold through this vital form of protection.

A major misconception for homeowners, which winds up in unpleasant consequences, is thinking that the standard policy provides enough protection. The standard policy is only actual cash value, as opposed to replacement cost value. This can mean a great deal to a homeowner once a claim is filed.

When you have replacement cost coverage, you receive reimbursement for the actual replacement of the item. In contrast, actual cash value provides you with compensation that accounts for the depreciation of an item. Therefore, if you recently bought a $1,000 television and it was stolen within a week of purchasing the item, you would receive the depreciated amount, as opposed to the full $1,000.

Contact Miller Insurance Associates in Carlisle for all of your Pennsylvania homeowners’ insurance needs. We can help you update your policy so that you receive optimal protection through replacement cost value.