At Storey Insurance in Senatobia, MS, we understand the importance of getting the most out of your home insurance policy. The primary purpose of insurance is to restore you to the condition you were in before you suffered a loss. One way we can help with this is to educate you about a subject that confuses some home insurance clients: replacement cost and actual cash value claim settlements.

Understanding Replacement Cost in Home Insurance

When purchasing your home insurance policy, you can decide if you want your claim settled on an actual cash value basis or replacement cost value. With replacement cost, you receive compensation during a covered insurance claim to recover the cost of an item that is similar in quality or brand new to replace what you lost in a covered peril. The cost often includes transportation and installation of the new product, appliance, or equipment.

What Does Actual Cash Value Mean in Home Insurance?

When you are paid on an actual cash value basis for an insurance claim, you are receiving the amount of the product you lost in a covered peril, minus depreciation. For example, if you lost a 55" television, you bought seven years ago. You would receive an amount for compensation that considers the age and condition of the TV and subtracts that from the replacement cost.

If you have a newer property with state-of-the-art equipment and the latest finishes and fixtures, the replacement cost would be the better option for your home insurance policy.

Contact Storey Insurance for Your Home Insurance Needs

At Storey Insurance in Senatobia, MS, we understand that insurance jargon can be confusing. That is why we offer a staff of industry professionals who can answer any questions you may have and help you have peace of mind about coverage for your home. Call us today at (662) 560-7021.