When it comes to homeowners insurance, “Actual Cash Value” (ACV) is a key term that helps determine how much you would receive in the event of a claim. ACV refers to the value of your home or personal property at the time of the loss, accounting for depreciation due to age and wear and tear. Essentially, it reflects what your home or items are worth in their current condition, rather than what you originally paid or what it would cost to replace them with new ones.
For example, if your roof is 15 years old and gets damaged, the insurance company will factor in its age and condition when calculating the payout. This means you might not receive enough to cover the full cost of a brand-new roof, as the payout will be reduced based on the roof’s depreciation. In contrast to auto insurance, where cars typically lose value over time, homes don’t always depreciate at the same rate, though wear and tear are still considered when determining the ACV.
If a total loss occurs, such as a fire that destroys your home, the ACV would be based on what the home is worth at that moment, factoring in the real estate market and any depreciation. Understanding how ACV works in homeowners insurance is important, as it directly affects the amount you could receive in a claim. Knowing this can help you decide whether you want ACV coverage or prefer to explore replacement cost options, which provide a higher level of coverage.
Our owner and founder, Pat Brennan, explains more. Check out the video below!
What Is Actual Cash Value (ACV) When It Comes To Homeowners Insurance? – Entrust Insurance, St. Clair Shores
Video Transcription
“What it’s actually worth at that point in time. Where coverage like that for the home varies from the auto is that your auto depreciates over time as mileage goes up and wear and tear the value of that goes down. It’s not always the case with a home but there’s also the wear and tear factored into that as well.
So if your roof is 15 years old. And there is a claim they’re going to factor in the age of that. They’re going to depreciate out of that that payout for the claim. If it’s a total loss for your home, so you have to rebuild it’s going to be subject to what the real estate market’s determining that the value of your home is at that time.”
Our Services
Here are all the insurances we can quote you for:
- Home Insurance
- Auto Insurance
- Motorcycle Insurance
- Boat Insurance
- Liability Insurance
- Business Insurance
- Commercial Trucking Insurance
Whatever your needs are, we’ve got you covered. We will work hard to save you money. Click the button below for a free quote today!
