Protecting Belongings: Actual Cash Value vs Replacement Cost

When securing insurance for your personal property, one major decision is choosing between actual cash value (ACV) and replacement cost coverage. These are standard options in many home insurance policies. The two types of personal property coverage offer different benefits. Here’s a look at those differences.

Actual Cash Value: A More Inexpensive Option

ACV coverage compensates you for the value of your item at the time of loss, factoring in depreciation. For example, if you purchased a laptop three years ago, the payout would reflect its current market value, not the price you paid.

 This type of coverage generally results in lower premiums but also lower payouts. It might be suitable for those who want protection but are willing to accept a lower value for older items. Still, we at Infinity Insurance Group often don’t recommend it to Post Falls, ID homeowners because of the limited protection afforded. 

Replacement Cost: A More Robust option

Replacement cost coverage generally pays the amount necessary to replace lost or damaged items with a new one of similar type and quality. This personal property coverage option doesn’t deduct for depreciation. 

Replacement cost better ensures that you can fully replace your belongings. It tends to have slightly higher premiums, but most of the Post Falls, ID homeowners we at Infinity Insurance Group work with are willing to pay a little more for much more robust protection.

Making the Right Choice

Choosing between ACV and replacement cost coverage ultimately depends on your situation. Talk with one of our knowledgeable insurance agents, and they can help you think through the two options. We’ll ensure you get the right personal property coverage for your situation and the right other home insurance coverage you need.