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How does actual cash value (ACV) affect a homeowners insurance claim?

Actual Cash Value is way of valuing a property insurance loss after a claim. The main concept that you need to understand with actual cash value is that in the event of a loss if your policy is actual cash value, depreciation will be taken out of your payment.

Meaning if you have 10 year old cabinets with a 20 year life and those cabinets cost $10,000 to replace. You will get a check from the insurance carrier for $5,000. (Very simplified for this example this is just informational for your understanding that is not the actual amount you are guaranteed to get).

Yes in most cases actual cash value policies cost less than Replacement Cost policies but the penalty when you have a loss can be severe.

Watch this video “How does actual cash value (ACV) effect a homeowners insurance claim?” for more details:

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This is video #31 of a one hundred insurance video series that The Murray Group is producing to provide insurance consumers with quick, valuable answers to their everyday insurance questions.

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Disclaimer: This article is for informational purposely only. There is no legal advice being suggested or proffered and the author assumes no responsibility or liability for the actions taken or not taken by the readers based upon such information.

created by Ryan Hanley