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HD Law Partners Tampa Business Litigation Attorney

What is the difference between replacement cost coverage and actual cash value coverage?

Replacement cost coverage is the more expensive of the two types of coverages that you can purchase through an insurance policy. This is generally for purchase of property coverage for either a structure or the contents of a structure or the personal contents of your home. Replacement cost coverage is that cost that it takes to replace an item. Item may be three or four years old. If you would go out and replace it, it’s probably going to cost more and that’s why the coverage costs more. Actual cash value, or ACV as it’s referred to, means that the insurance company or insurance policy is only going to pay what the value of that three year old couch is at the fair market value, what a buyer would pay in the market. So that coverage is less costly and it will pay less at the time that a claim is made.

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