Replacement cost coverage (RCV) is better than actual cash value (ACV)
Updated: Jun 8
Whether it be a business or personal policy, coverage can fluctuate based what you own. Insurance is meant to protect your assets, which is why is it important to quote your belongings accurately.
Lets say you bought a house five years ago, and you set your building worth at $299,000, and your personal property such as furniture, appliances, art work, clothes, and all that you own at $200,000. In the five years you have been living in your home, you added an expensive rug, six more paintings, additional electronics and $7,000 worth of decor. You can protect those assets by raising your coverage by the amount of money you spent. If you decide to sell all your paintings, and see that you no longer need the higher coverage amount for your contents, we can lower it back down.
The great thing about insurance is that it guarantees a payout for your personal properties, should a risk incur a loss. When purchasing a policy, you have to consider two options for compensation when things go south: Do you want to get paid the actual cash value (ACV), or replacement cost coverage (RCV) for your assets?
Actual Cash Value is the amount you'll be given for your assets when you initially purchased it, minus depreciation. Replacement Cost Coverage is the amount of money it would take to replace your damaged or destroyed property with a similar or same one. For example, if you bought a new television and it got stolen a year later, assuming you have replacement cost coverage, you will get the current cost of the T.V. paid to you by the insurance company because the loss is a result of a theft. If the T.V. gets knocked over and breaks, the company won't cover it. Personal property is any content in your home that isn't nailed to the ground.
Reading and understanding what terms on your policy mean can really affect your recovery from a peril. Check out TDI.texas.gov for more information.
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