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.
Flood insurance covers damage to your home, commercial real estate and personal or business property caused by natural flooding.
Flood insurance premium rates are subsidized by the federal government.
Most mortgage companies require flood insurance if you are in an area likely to flood.
But floods can happen anywhere, so think carefully when deciding whether or not you are at risk.
Most homeowners and business PC & L policies do not cover flood damage. Check with your insurance agent or broker to fully understand your flood insurance coverage.
Flood insurance policies are issued through private insurance companies in partnership with the National Flood Insurance Program.
The National Flood Insurance Program (NFIP) is a government program established to help property owners, renters and businesses obtain flood insurance.
Flood insurance policies may appear to be written through a private insurance company, but the private insurance company is doing so in partnership with the NFIP.
The policy flood insurance rates are set at the national level and coverage amounts are capped.
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.
Most reputable insurance agents and brokers will quote the insurance policy including Replacement Cost coverage as it is much better protection for you, but the onus is on you to make sure you know what coverage level you are buying.
With insurance, as most things, cheaper premiums may be the result of competitive quotes or indicate reduced coverage. Be sure you know which it is & the financial risk you are assuming when buying your policy.
The content on this site is provided for educational and informational purposes only. It is not intended nor provided as financial or legal advice.