Understand your insurance policy

When buying coverage, you may insure your property and belongings for replacement cost or actual cash value.

Replacement cost is the amount needed to replace your damaged property with materials of similar kind and quality, without deducting for depreciation. Actual cash value is the amount needed to repair or replace the damage after depreciation. For instance, let’s say you selected Actual cash value coverage, and bought a new television in 2007 for $700. If lightening destroys that television in 2008, your insurance will not pay the full $700. It will pay a lower figure that reflects the television’s current value, let’s say $300. If you selected replacement cost, however, and the same television now cost $900, you will initially receive the actual cash value for your television ($300). When you buy a new television and present the receipt to your insurance carrier, you will receive the balance ($600). Keep all receipts! Your insurer will require proof of purchase for full replacement.

Always consult with your professional insurance carrier to determine the proper coverage for your situation. We also recommend you review your policy with your insurance representative on an annual basis to be sure you are covered adequately and understand your insurance policy in the event of a claim.

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