Let’s take out the confusion and legalese and get right down to the brass tax! You may be familiar with these terms, but do you really understand what they mean?
ACV (Actual Cash Value)
While most insurance companies offer ACV as an option, its meaning can be easily misunderstood. The term “Actual Cash” is better understood as the depreciated amount, or “Fair Market” value. Let’s say that 3 years ago you purchased a TV for $1000. Under your ACV policy, if your television is stolen in a home burglary, the insurance company would cover the TV for Fair market Value, or what it would cost for you to purchase a similar TV – Depreciation, which in our story is going to be around 5%/yr. So, if a similar new TV is selling for $1,100, the insurance company would pay $935 (or 1,100 – 15%). This means not only will you have been burglarized, but you also need to pay the difference of $165 out of pocket to replace you TV. ACV may save you a little bit up front, but can be lacking when it comes time to use it.
RCV (Replacement Cost Value)
While not as captivating of a term, RCV is the preferred coverage for most people. The cost for RCV is a bit more cost, BUT the coverage is far better. In our story above, you will ultimately be given the full value of $1,100 for replacing the TV. Typically it works like this: you get a check for the $935, then once you show proof of purchase for the replacement TV, you receive the additional $165.
Check your current policy. If you want to add RCV coverage to your policy, call our customer care department and ask about adding this coverage today!
Call: 1-800-522-0146 ext 223