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Daytona Beach Lawyers > Blog > Property Damage / Insurance > Should You Choose Replacement Cost Coverage Or Actual Cash Value Coverage?

Should You Choose Replacement Cost Coverage Or Actual Cash Value Coverage?


When you need to insure your property against damage from tornadoes, hurricanes, and tropical storms, there are many different types of policies you can purchase. With everything becoming more expensive by the day, it seems, Floridians want to obtain the coverage they need for the best possible price. When determining how you can do this with your insurance, it is important that you know two important insurance terms. These are actual cash value and replacement value. So, which one is best for you? Our Daytona Beach residential and commercial property damage lawyer explains more below.

Actual Cash Value vs. Replacement Cost Coverage 

Before determining which type of coverage is right for you, it is critical that you understand the difference between them. Actual cash value provides coverage for repairing or replacing the item as its current cash value. As such, any depreciation in the property is considered and is not covered. On the other hand, the cost of replacement provides coverage for the current cost of replacing the property and depreciation is not considered.

Understanding the differences between the two types of coverage is important. Before deciding on which one is right for you, there are many factors to consider.

Factors to Consider Before Purchasing Coverage 

There are many factors to consider before purchasing either an actual cash value or replacement cost coverage policy. The most important of these are as follows:

  • The age of the property: You will not be eligible to obtain as much coverage under an actual value policy for your home as you would with coverage for the cost of replacement. For example, you may need your roof replaced. If you replaced it 15 years ago and its life expectancy was only 20 years, you would only receive coverage for the remaining five years with an actual cash value policy. That likely would not be enough to install an entire new roof.
  • Cost of materials: The cost of building materials has increased exponentially since the pandemic, and they do not show any signs of slowing down. With the cost of materials increasing, insurance companies are starting to charge higher premiums for replacement cost coverage. On the other hand, the actual cash value may also not be that high if you purchased the materials years ago. As such, you must compare the two closely to determine which one is right for you.
  • The cost of the deductible: Any insurance policy will come with a deductible. You also need to compare the deductible of an actual cash value with that of replacement cost coverage to determine which one is more affordable for you.

Our Residential and Commercial Property Damage Lawyer in Daytona Beach Can Help with Your Claim 

If you have sustained damage to your property, you should have legal representation before filing your claim. At Bundza & Rodriguez, our Daytona Beach residential and commercial property damage lawyer can advise on what you are eligible for so you obtain the fair coverage you deserve. Call or text us now at 386-252-5170 or chat with us online to schedule a free consultation.



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