What Would It Cost to Replace the Contents of My Home?
Even though we hope for the best, Mother Nature doesn’t come with many guarantees. Losing your home and all of its contents to a natural disaster or a similarly destructive event is not only emotionally distressing but financially catastrophic as well. Returning to normal life–in your pre-loss condition– depends on the amount of insurance coverage you have for your personal property and your ability to provide records documenting your property. (Check out our free pre-loss inspection service to create a digital record now.)
When it comes to protecting your personal belongings, there are two different ways you can go about insuring them.
Actual Cash Value
Actual cash value coverage refers to the amount it would cost to replace the items, less reasonable depreciation. This type of insurance assumes that, like many things, your belongings decrease in value over time, and your insurance will cover what it deems the property was worth when it was damaged, not how much you originally paid for it.
For instance, let’s say a hurricane rips through South Florida and destroys your television. It’s expected to last 10 years, but you’ve had it for only 5 years. While it might cost $600 to replace it, the insurance company would determine that half of its lifespan was used and would set its actual cash value at $300 instead.
So, be careful: Unless an insurance policy clearly specifies that your property will be covered at its full replacement cost, the coverage is for actual cash value.
Replacement cost, on the other hand, pays you the full dollar amount you would need to replace your damaged or lost personal property without any depreciation. This means that if you have a 5-year-old television that needs to be replaced for $600, your policy will pay out the full $600 with no adjustment for the age of the set. Of course, the deductible on your policy will still apply, and the replacement cost is limited to a maximum dollar amount, but that amount varies depending upon your specific plan.
Regardless of which type of insurance you have, a pre-loss inspection is an extremely useful tool for facilitating insurance claims in the event of damage or loss. If you have any questions about property claims or would like to get a free pre-loss inspection, call us to schedule an appointment.