What is Replacement Cost Compared to Actual Cash Value Coverage?
Replacement cost coverage is designed to cover the cost to repair or replace your home in the event of a loss, subject to certain limitations, if you carry an adequate amount of coverage to meet the co-insurance requirement. Coverage will not exceed the policy limit. Actual cash value provides less coverage since claims are reduced for depreciation and obsolescence. This could be substantially less than replacement cost. Some insurance companies may offer only actual cash value for older roofs and older homes. What may not be covered? Neglect, intentional loss, earth movement, general power failure, and even damage caused by war may not be covered. If you fail to take care of your property (e.g., a leaky roof), you might not be covered. Obviously, if you intend to lose an object or damage your property, there’s no coverage. Building codes established by governmental bodies that drive up the cost of rebuilding or repairing after a loss occurs might not be covered by your insurance polic
