When you buy insurance for your home in Albertville, Minnesota, you should make sure you understand what kind of coverage you have. If you have the wrong type of coverage and suffer damage or loss to your personal property, you may be in for a surprise when you file a claim with your home insurance policy.
Your homeowners policy will either provide you with replacement cost coverage or actual cash value (ACV) coverage. Replacement cost coverage is better coverage because it will pay for you to replace your lost/damaged property or item with an equivalent item made of similar materials and of similar quality. As an example, if you have a couch that you paid $1,000 for five years ago and it is destroyed in a fire, the insurance company will issue you a check for enough money o buy a new couch of similar quality. That is not the case if you have actual cash value coverage.
Actual cash value is defined as the replacement cost minus depreciation. With a few exceptions, most assets depreciate over time. Their condition can deteriorate or go out of style. Depreciation hits computers and electronics hard as new technology causes older items to rapidly lose value. If you have actual cash value coverage and file a claim, you will only receive the current market value, based on the age and condition of the item or items you lost.
Although you might pay a little higher premium for replacement cost coverage as opposed to actual cash value coverage, if you suffer a loss, you will be glad you had replacement cost coverage.
At Pizano Insurance you can talk to an independent agent and find out everything you need to know about insurance for your home. We can compare policies from multiple insurance companies and find you the best quote for the coverage you want and need for your home.