Insurance Terms That Could Save You Thousands
Did you know that 70% of homeowners are underinsured? Understanding the difference between ACV and RCV coverage could save you thousands when filing a claim. Keep scrolling to decode these critical insurance terms and ensure you’re properly protected.
Actual Cash Value (ACV): What You’ll Get
Replacement Cost MINUS Depreciation
For a 5-year-old $2,000 TV with a 10-year lifespan, you’d only receive $1,000
Lower Premium Costs
Save 10-15% on premiums compared to RCV policies.
Standard for Auto Insurance
Most auto policies use ACV by default.
Replacement Cost Value (RCV): Full Protection
Full Replacement Cost
Get the entire cost to replace with a new equivalent item.
Two-Step Payout Process
Initial ACV payment + remainder after you replace the item
Higher Premiums
Costs 10-20% more than ACV coverage
You typically must replace items within 6-12 months to receive the full benefit. For that 5-year-old TV, you’d get the full $2,000 replacement cost.
Choose The Right Coverage For Your Needs
RCV is recommended for your primary home and valuable possessions, while ACV might be sufficient for older vehicles or secondary properties. With RCV claims paying 30-50% more on average, it’s worth considering the upgrade.
Surprisingly, 64% of homeowners don’t realize their standard policies use ACV. Don’t be caught off guard! Tag someone needing insurance knowledge or share this post to help others protect their investments.
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