Actual Cash Value vs. Replacement Costs

In the headlines of late; hurricanes, tornadoes, earthquakes, floods and wildfires have left millions homeless and without belongings. How would you go about putting your family’s life back together?

The first step would be to make sure everyone is together and without injury. Then you would turn to your insurance policies. How much of what you lost and how you lost it is covered? Can you rebuild?

Coverages vary. Flood insurance is a separate policy or rider if it is an act of nature. Where you live and your proximity to natural disaster probabilities determines what extra coverages you need to carry.

When you originally negotiated your insurance coverage your possessions may have been relatively new. Insurance that provided actual cash value would have provided enough to replace the lost items. Now that your items may be more than ten years old, the actual cash value through depreciation may net you yard sale prices. Before a disaster hits you, you should re-evaluate your coverage to provide replacement costs for your property.

Home insurance follows the same rules. As you pay down your mortgage, your home insurance will cover the balance owed. You need to have replacement costs coverage in case of a disaster such as a fire.

You need to look at your coverage. Lou Aggetta Insurance will be happy to discuss your needs with you in the California, Nevada and Arizona area.