Replacement Cost vs. Actual Cash Value
Investing in the right amount of insurance protection will help to ensure that you will be reimbursed if any of your personal property is damaged or destroyed. From your homeowners insurance to your auto insurance, knowing how to properly protect your assets can help to ensure that you do not have to pay for damages out of your own pocket.
When looking for the right insurance policy, you will have the option to choose between actual cash value or replacement cost. The actual cash value of an item, also known as ACV, is determined by looking at the original value of an item, minus the amount that it has depreciated since you bought it. On the other side, replacement cost is the amount of money that it would take to replace destroyed, damaged, or stolen property with a brand new item.
While actual cash value and replacement cost can be used to determine the payout to replace your assets after your home is destroyed, it is also used to determine how much you will receive from your auto insurance after an accident. If your car is totaled, your insurance company will issue a payout based on the type of coverage that you choose. If you chose actual cash value coverage, your auto insurance company will look at many factors to determine what your payout will be if your car is totaled, including the mileage of your car, the overall physical condition, and the option packages that you chose. Working with your insurance agent can help to ensure that you invest in the right amount of coverage for your specific situation.
For more information on the importance of choosing the right amount of coverage with your insurance policies, and to ensure that you have the protection you deserve, contact the insurance experts at Agers Insurance Services in Oakley, California.