• Tel: (651) 675-4911
    Email: eric@MetzlerAgency.com

  • Actual Cash Value

  • Most homeowners insurance policies cover the contents of your home (i.e., personal belongings) on an Actual Cash Value (ACV) basis. Many insurers offer an option of insuring personal property at replacement cost using the HO 04 90 endorsement. The premium will be slightly higher for this coverage; however, you may want to consider the option.

    For example, if you selected ACV coverage and bought a new television in 2015 for $700 and lightening destroys that television in 2020, your insurance will not pay the full $700. It will pay a lower figure that reflects the televisions current value, let’s say $350.

    If you selected replacement cost, however, and the same television now costs $900, you will initially receive the ACV for the TV ($350). If and when you replace the television, you should provide your insurance company with a receipt of purchase for their consideration of paying the balance ($550). Your insurer will require proof of purchase for full reimbursement consideration.

    Whether your property is insured for replacement cost or actual cash value, it is important to keep track of its value. Check with your agent or insurance company on an annual basis to make sure your property is adequately insured.