Replacement Cost Vs Actual Cash Value
If you have a Homeowners Insurance Policy, you should know your
policy's settlement provision for personal property. Replacement
Cost coverage will replace your damaged or stolen items of
like kind and quality. Actual Cash Value provides coverage
only for the current value, which factors in depreciation.
For example, a tree falls through the roof onto your eight-year
old washing machine. If you have a Replacement Cost policy
for contents of your home, the insurance company will pay to replace
your damaged washing machine with a new one. If you have an Actual
Cash Value policy, the company will pay only the value of
the used machine. That means you will have to either buy a used
machine or pay the difference between what your insurance company
paid you and the cost of the new machine. Check your policy under
Section 1, Conditions, Loss Settlement or ask your agent
or insurance company representative.