Actual Cash Coverage vs. Replacement Cost Coverage with Alabama Home Insurance

When taking out an Alabama home insurance policy, one of the major decisions you will have to make is whether to get actual cash value coverage or replacement cost coverage.

Actual cash value will reimburse you for the fair market value of possessions that have been damaged or stolen. Under this option you will receive a payout amounting to the sum that your possessions would sell for today instead of what you originally paid for them.

When it comes to rebuilding your home, cash coverage will only cover the depreciated value of the parts of your home that were damaged. Should you make an insurance claim to repair your roof; your insurance carrier will factor in the wear and tear on the roof when determining your pay-out.

Replacement cost coverage does not factor in depreciation. You will be covered for the full cost of replacing your damaged or stolen possessions with items of comparable quality. Should your bicycle be stolen, you will be reimbursed the cost of purchasing a bicycle of similar quality, as if the stolen bicycle was new.

When being reimbursed for repairs to your home, you will be fully covered for the cost of fixing your property with materials of like kind and quality. This should mean you can rebuild your home to the standard it was before it was damaged.

Replacement cost coverage is more expensive than actual cost coverage but it could pay off in the event of a claim. Speak to your Alabama home insurance agent to decide what kind of coverage is best for you. With Peck-Glasgow Insurance, you can get the coverage you need with our agency’s help. Contact us today for more information!

 

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