FAQ - ACV Affect on Homeowners Insurance Claim

How does actual cash value (ACV) affect a homeowners insurance claim?

Actual Cash Value is way of valuing a property insurance loss after a claim. The main concept that you need to understand with actual cash value is that in the event of a loss if your policy is actual cash value, depreciation will be taken out of your payment.

Meaning if you have 10 year old cabinets with a 20 year life and those cabinets cost $10,000 to replace. You will get a check from the insurance carrier for $5,000. (Very simplified for this example this is just informational for your understanding that is not the actual amount you are guaranteed to get).

Yes. In most cases, actual cash value policies cost less than Replacement Cost policies, but the penalty when you have a loss can be severe.


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