Actual Cash Value Explained! | Home Insurance 101
Actual cash value is a form of personal property coverage in standard home insurance policies. Dom from Jerry explains how it can help you if your belongings are ever damaged or lost.
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If your insured property suffers from loss or damage, your insurance company may use something called “actual cash value” to decide how to reimburse you. Actual cash value is a type of personal property coverage under home insurance.
Insurers calculate actual cash value by subtracting depreciation from the cost to replace damaged or stolen property. Depreciation is the loss in value over time, which is a result of things like age and wear and tear.
So, for example, let’s say your laptop was damaged in a house fire. A home insurance policy with actual cash value coverage will reimburse you for what it’s currently worth, after accounting for depreciation. This means the amount that’s paid out to you may be less than the cost to buy a replacement laptop at today’s prices.
You should also be aware that payout limits or plan deductibles can reduce your reimbursement under actual cash value coverage. Always read the fine print in your policy to understand how your home insurance company will reimburse you.
I hope this information helps. If you have questions about actual cash value or any other aspect of home insurance, contact one of our expert agents on our app.