As you are buying San Diego homeowner’s insurance, it is only natural to be focused on finding the most affordable policy that provides you with adequate coverage limits. A majority of San Diego homeowners will sit down and determine how much coverage that they need to rebuild the home and to replace their personal belongings in the event of a total loss. While these are very important things to consider as you build a policy and compare coverage, you need to also consider how your property will be valuated in the event of a claim. Some companies use the Actual Cash Value valuation and others use Replacement Cost when determining how much property is worth.
What is Actual Cash Value?
If property is valued with the Actual Cash Value method, which is commonly written as ACV, the claims adjuster will use the original value of the property and then depreciate it based on age. This means that you will be paid the original purchase price minus depreciation when filing a claim. If your television was worth $2000 when you purchased it 5 years ago, you may only receive $400 after depreciation is considered. This can make replacing your belongings at the time of the loss very difficult.
Why is Replacement Cost a Better Option?
Replacement Cost, also known as RC, is a better option if you do not want the value of your claim to be depreciated. When you have an RC endorsement, your property will be valuated based on how much it costs to replace the item at the time of the loss with the closest replacement. You do not have to pay anything but your deductible in order to replace what has been lost by a covered peril.
What is the Right Option for You?
It is important to understand all of the details of your home insurance policy when you are comparing your options. Ask the right questions, consider coverage, consider price, and make the best decision.
If you need assistance with determining the right policy for your individual needs, contact American Tri-Star insurance today. We are a trusted insurance specialist offering great deals on comprehensive home, car, business and health insurance policies. Call us at 619-272-2100 and see how much you can save!