REPLACEMENT COST VS. ACTUAL CASH VALUE
An Actual Cash Value policy is typically called a dwelling fire policy.
In the event of a loss, whether partial or total, the insured will receive payment for the loss on an actual cash value basis. This means cost minus depreciation.
The payment will not exceed policy limits and there is no guarantee that the actual cash value will be as much as the policy limits. This type of policy is generally used for rental homes, vacant homes or older homes that have not been updated or remodeled.
A replacement cost policy is typically called a homeowner’s policy.
In the event of a loss, partial or total, the insured will receive payment for the actual cost of the repair or replacement up to policy limits. Replacement cost policies offer many built in coverages that dwelling fire policies do not.
For example, replacement cost policies offer replacement cost on the personal property as well as the dwelling. There is automatic coverage for other structures on the property at 10% of the dwelling coverage.
In some situations homeowner’s policies will offer actual cash value on roofs if the roof is older.
If you have questions on which policy is right for you, contact one of our locations via phone or email us your questions.
Endsley Agency and Lehigh Endsley Agency are your knowledgeable and trusted insurance agents. We will help you to compare your options and get the right coverage for you.