Emergencies and disasters happen when we least expect them, so being prepared with an insurance policy can potentially save you a lot of stress and money. But you need to have the right policy to help you obtain funds to get back on your feet. If you have to file an insurance claim, do you know if your policy has replacement cost coverage or actual cash value? Both will help cover costs overall but in a different way. For residents in Geneseo and Livonia, NY, Chanler Agency has ensured that every client knows exactly what their policies include. 

What Is the Difference Between Replacement Cost & Actual Cash Value?

What Is a Replacement Cost?

Just like it sounds, replacement cost is how much it would cost to replace your loss with something of similar worth. The benefit of this is that it does not take into account any normal wear and tear, so you could end up with a replacement that is a little newer than what you lost.

What Is Actual Cash Value?

This comes down to what your insurance agency sees as a fair market value for your property, car, or item covered by your policy. Say your home was flooded and no longer livable—the actual cash value of the home would be calculated by the replacement cost minus depreciation. In other words, this is the market value of the item. 

Which One Is Best?

Ultimately, it depends on your situation. If you had to replace your car that had a lot of internal wear and tear, you’d benefit more from a replacement cost. However, if your home is damaged, actual cash value could fare better. Since you can’t predict when you’d need to file an insurance claim, speak to your agency about what you want to cover and have them explain each option so you can make the best decision for your lifestyle.

For help deciding how to set up your policy if you need an insurance claim, set up an appointment with Chanler Agency. For the Livonia office, call them at (585) 346-3118, or contact the Geneseo office at (585) 243-5520. To learn more about their team, visit their website.