Insurance Insights: Replacing your home
When purchasing homeowners insurance, it is important to make the distinction between “replacement cost” and “actual cash value.” Replacement cost provides the insured with the amount that it would take to replace the house and all of the personal property in it. It refers to the cost to replace the property on the same premises with other property of comparable material and quality used for the same purpose. Actual cash value, which is also known as “market value,” is equal to the replacement cost minus depreciation. In other words, actual cash value is the dollar amount that one would expect to receive for an item that is sold in the market place. Replacement cost policies provide more protection.
We can answer any questions you may have about your homeowner’s insurance policy. Should have more coverage such as replacement cost or actual cash value? Stop by and let’s discuss your particular requirements. Your needs will be carefully and completely identified – and then professionally and expertly satisfied. To find out how we can help you, call us.
Quick Tip: An actual-cash-value homeowner’s policy may cost less than a replacement-cost policy, but it provides less coverage.