Taking out New Hampshire home insurance is highly recommended to help give you coverage for loss or damage. This may be as the result of a break in, fire, or a natural disaster. However, in assessing your options, you may have come across the terms “actual cash value” and “replacement cost”, and may be wondering what the terms mean and if there are any price differences:
Actual Cash Value (ACV)
An actual cash value policy will replace the value of the possessions lost or damaged. However, it will take into account depreciation of the property and other wear and tear. For example, a payout for a 3-year-old flat screen TV worth $1,000, which was stolen in a burglary of your house, may have lost some value over the time of use. Even though actual cash value policies usually pay less than replacement cost, the level of premium you need to pay is usually lower.
Replacement Cost (RC) A replacement cost policy pays the full cost of the item’s replacement, unless there are any arrangements such as deductibles. It is also usually more expensive to buy than an ACV policy. Obtaining the right type of New Hampshire home insurance to suit your coverage requirements is crucial. The option you choose will reflect your goals and the value you afford to your property. Talk to us for more information on this subject! *