Replacement Cost coverage pays your property damage or loss claim based on the cost of replacing the item. This is much better coverage than Actual Cash Value (ACV) coverage.
Replacement Cost coverage does not mean that you & the claims adjuster will not disagree over what it will cost to replace the item, but it does mean that you will almost always receive more money than with an ACV claim payment.
Actual Cash Value (ACV) is an insurance term that will impact how much you are paid in the event of a loss due to stolen or damaged property.
When a policy’s coverage is based on ACV, the amount of money you will recover for a covered loss is the calculated on the replacement cost MINUS an amount for depreciation of the property.
The ACV amount is almost always less than the Replacement Value amount and the depreciation deduction can result in a significant reduction in the amount of money you are paid for your claim.
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