People looking for a new homeowner’s insurance policy or reviewing their current policy have several things to consider. This includes what types of coverage they have. One of these is whether the policy is written for replacement cost value or actual cash value.

While both of these are valid coverage methods, they significantly impact the type of reimbursement they’ll receive if they have to make a claim. Our agents at Zot Insurance Agency can discuss your situation with you and help you determine which option might be better for your Plantation, FL, home.

Understanding Replacement Cost Value

The replacement cost value method pays to repair or replace covered items based on the current market price. It doesn’t factor in the depreciation of an item. This means that even if a television that’s a decade old is destroyed, you’d still be able to receive the current cost of a comparable tv without having to account for a decade’s worth of depreciation. Because of the higher coverage value, the premiums are usually higher for these policies than they are for actual cash-value policies.

Understanding Actual Cash Value

Actual cash value reimburses the item’s value at the time of loss. This method considers depreciation, so factors like age and wear on the item are accounted for. That same decade-old television would be covered at a much lower replacement value under an actual cash value policy. The upside to this is that the premiums on these policies are usually lower than the ones for replacement cost-value policies.

Choosing the Right Coverage

Plantation, FL homeowners should review their coverage if they already have it or look into a new policy if they don’t. Contact our team at Zot Insurance Agency to discuss your coverage options today.