Shopping for insurance isn’t always straightforward. Find out which coverage suits your needs best.

When you purchase a home for the first time (or even if you have previously owned a home) there are many important things to think about. The specific terms of your homeowners insurance is one of many important things to consider, to put in place and to understand.

One critical piece of information to be aware of regarding your policy is how you would get reimbursed in the event that your home or your belongings are lost, damaged or stolen. After all, this is the entire reason for having a homeowner’s insurance policy in the first place.

We’ve gathered some basic information about the two most common types of coverage so that you can make an informed decision about the best type of coverage for you and your family.

Which method will ultimately be better for you?

Replacement Cost is the amount it would cost to replace an item with the same or a similar item, if it were destroyed, stolen or damaged. Most often, the replacement cost is based on the cost of the item when you purchased it. If the item can no longer be purchased, then this amount would be calculated by using the value of a similar item, so that you could replace it with something very similar.

Actual Cash Value (ACV) is the market value assigned to an item. If your policy reimburses using the Actual Cash Value, you will notice that depreciation is factored into the ultimate value of the item(s).  You may wonder how an insurance company calculates this depreciation, but the answer is that it depends on the company and their policy. The value often is calculated based on the life expectancy of the item(s).

You probably do not need to be told that a policy, which offers reimbursement using the replacement cost, is going to be a better plan for the consumer. Often times, your possessions are more valuable to you than they would be if you were going to sell them for their value based on their age.

So, if you are evaluating homeowner’s insurance policies, you will want to evaluate the method of reimbursement and be ready to ask questions about whether the policy uses the replacement cost or the actual cash value to assign value if your possessions are lost, damaged or stolen. This information should be made available to you as you negotiate your policy.

Avante Insurance can help you find the best policy for you

Avante is a leading insurance agency in the Miami, FL area, dedicated to family, integrity, loyalty and an entrepreneurial spirit. We have spent time developing strong relationships with many of the best insurance companies in the country so that we can ensure that our customers receive the best customer service in the business.

We believe in offering full transparency to our customers, we answer questions truthfully, and provide ample information so that our customers can make the best possible decision about their coverage.  If you still have questions about replacement cost and actual cash value, call our customer service team today at 1-305-648-7070.