Insurance coverage can get confusing. At Harmoning Agency, we believe our customers should always know what they are buying. No matter the changes in the industry, this is and always has been our mission. We have been getting many questions on the differences between replacement cost coverage versus actual cash value coverage. Let’s take a deeper look at their differences and how it could impact you in the case of a claim.
Replacement Cost Versus Actual Cost Value Coverage
It is very important to remember what actual cash value coverage really is, especially when planning finances for you and your family. Actual cost value coverage is a depreciated amount on the materials to do the repairs after the claim. If you have actual cash value coverage, the materials used to fix the damage will be depreciated by the company. You as the property owner will be paid a percentage of the loss.
Replacement cost takes into account the entire cost of repair without the depreciated value. Let’s look at an example to help explain this a bit deeper. If you have replacement cost coverage, the cost of fixing the damage by removing the shingles along with buying the new shingles to recover it, and the labor is all covered at the cost.
Why Do Companies Do Actual Cost Value Coverage?
Many companies are providing actual cost value coverage, especially with older buildings. Actual cost value coverage is a way that we share risk when the buildings are not new. If your insurance coverage has actual cost value coverage in place it is something very important to remember when filing a claim in the future. Since the risk is shared on the building between the insurance provider and you, the property owner, there are a lot more dollars out of pocket then you may be formally used to with insurance claims.
Check Out Your Options at the Harmoning Agency
As a licensed agent, we will help you take a look at all your options and understand the type of coverage you have for all your policies from auto, home, pet, life and more. If you have additional questions about actual cost value coverage or your options, give us a call today at the Harmoning Agency. We will be happy to help!