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Home > Blog > Actual Cash Value vs. Replacement Cost
FRIDAY, AUGUST 24, 2012

Actual Cash Value vs. Replacement Cost

Piggy BankHave you ever wondered what the difference is between Actual Cash Value and Replacement Cost?

In Property & Casualty Insurance, these key terms are important to know, especially when purchasing a policy. Actual Cash Value is the price an item could be sold for right now. So, that TV you paid $2,000 for two years ago does not have an Actual Cash Value of $2,000. Items like TVs, computers, stereos, and vehicles depreciate, meaning they lose value as they get older. Actual Cash Value will calculate for depreciation. The Replacement Cost is going to be the price to replace the item now in its pre-loss condition. So, to replace that TV you spent $2,000 on two years ago with a similar TV in size, features, etc. might cost $2,500 today.

When looking at insurance policies, these are important differences that you need to be aware of to select the right coverage on your homeowners, renters, and auto policies.

To speak with an agent regarding Property & Casualty Insurance, call 530-872-0111.

Posted 5:31 PM

Tags: actual cash value, replacement cost, property, property and casualty, pre-loss, depereciate, depreciation, auto insurance, renters insurance, homeowners insurance, value
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