How you value your stuff can make a huge difference in your coverage. It changes what indemnification means, and indemnification is what the purpose of insurance is. The difference between the actual cash value of something and it's replacement cost can change everything. The first thing you need to know is how your valuables are valued! Here are the words you may see:
- ACV (Actual Cash Value): What your stuff is worth right at this exact moment in cash value.
- Replacement Value: What it will cost to replace what you had with exactly the same thing. For example - if you total a 2005 car, your policy is going to give you enough to buy another 2005 car of the exact make and model and mileage.
- Cost New: What it will cost to get a brand new version of whatever it is that was lost. This one is specific to certain kinds of insurance and can be hard to get - you can see why insurance companies wouldn't want to have this on their policies. After all - buying a brand new car when it was a ten year old one that was totaled is a big difference in cost.
- Stated Value: The amount of money you say your valuables are worth. Our rule of thumb on this one is - how much would it cost to replace your item with one in the exact same condition plus how much have you put into modification of that item. For example - we insure a lot of limousines. How much would it cost to replace your limousine with another one in the same condition plus how much have you put into the television, upholstery, and fancy additions to make it your own? In this case - you will not be able to get more than you valued your item for. So if you say all your personal belongings in your house are worth $20,000, then you will not get more than $20,000 to replace everything in your house in the case of a total loss. So make sure you have enough money listed in your stated amount!
Now, do the second part. Call your agent and make sure you understand how your valuables are valued in your policy. Make sure you know what you would get in the case of an accident - and make sure it's what you will need!
Have more questions? Give us a call at 800-843-2430.