Streetsmart insurance Blog
Your house is filled with important possessions, unique items that define your space and make your home meaningful. A homeowners insurance policy can protect your property in case disaster strikes, but your current policy may not provide enough coverage for the full value of your belongings.
Your insurance company can insure your property at replacement cost or actual cash value. By insuring your belongings at replacement cost, your policy will cover the cost of replacing each item with new objects of similar material and quality. If your property is insured at actual cash value, your policy will cover the cost of replacing your belongings at their current book value (their original cost minus depreciation).
Although this distinction may seem irrelevant when you purchase your policy, it will determine how you recover from damage in the event of a loss. If a 20” flat screen TV was stolen from your living room, replacement cost would cover the price of buying a new TV for your home while actual cash value would pay to replace your TV at its depreciated cost. That might not matter much if you purchased your TV six months ago, but if your TV was made in 2010 actual cash value would prevent you from buying a new TV of comparable value.
Replacement cost coverage is available to most homeowners insurance policyholders, but it may come at an extra cost. Although some clients are concerned about the price of replacement cost coverage, it is the best way to insure your belongings will be replaced with objects of equal value.
What You Should Insure At Replacement Cost:
Your House: Your property’s market value is variable and can leave you without sufficient coverage in the event of a loss. Replacement cost coverage ensures that your home will be repaired regardless of the cost.
Personal Possessions: Although your personal property may depreciate in value, you still benefit from its utility. Insure your belongings at replacement cost, including your furniture, technology, and appliances.
Family Heirlooms: Your antiques have financial and sentimental value, so make sure you insure them appropriately. The right coverage could determine whether you replace your prized possessions with exact replicas or modern knockoffs.
Street Smart Insurance is committed to providing affordable coverage.
Whether you are looking for your first homeowners insurance policy or you are shopping for a better price, our agents are ready to help.