When purchasing a property policy, one decision you will need to make, is whether or not to buy your coverage with "Replacement Cost" (RC) or "Actual Cash Value" (ACV)
Replacement Cost means, "the cost to replace an item or structure to its pre-loss condition"
Actual Cash Value means, "replacement Cost less depreciation.
In simple terms, assume you had a TV that was 5 years old, and it was damaged in a fire. Under Replacement Cost, the insurance company would give you enough money to buy a NEW television. Under Actual Cash Value, they would give you the money your old, used TV was worth, and it probably wouldn't be enough to but a new one.
Sometimes insurance companies will only offer ACV if they feel there is a greater risk of a loss, such as on a building that has not been updated in some time.
This is definitely a coverage that you should pay attention to on your policies, as a policy with ACV will usually be far cheaper than a policy with RC, and for good reason.
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Jonathan S. Carroll, ASLI, CRIS
Bradley & Parker
320 S. Service Rd, Melville, NY 11747
O - (631) 981-7600
D - (631) 650-4034
C - (917) 376-0075
F - (631) 981-7681
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