Renters Insurance: The Difference Between Actual Cash Value and Replacement Cost Policies

When comparing quotes for renters insurance, you need to know the difference between actual cash value and replacement cost policies. Although the two types of coverage will protect your belongings in the event of fire, theft or a natural disaster, there are distinct differences. Make sure to educate yourself about both types of plans before you choose one or the other. In addition to the cost of the policies, the amount of coverage will also need to be compared.

Actual cash value is the cheaper of the two types of protection. If you decide to purchase this type of insurance, it will pay you what your items are actually worth, or the actual cash value, at the time of the loss. This means, if you have a lot of older possessions, you will not be able to get much money when you make a claim. Probably not even enough to replace half of your items. On the other hand, if you choose replacement cost policies, you will be able to make a claim for what it will actually cost to replace the items you lost. If you own expensive electronics, game systems and high end appliances, this is probably the type of coverage you need.

Compare rates from several companies before choosing the renters insurance policy you need. Many times you can find an affordable replacement cost policy that does not cost much more than an actual cash value plan. If you ever find yourself in a situation where you need to make a claim, you will be glad that you went with more protection. No one wants to think about a disaster or theft affecting their home, but knowing you have great insurance will make the situation easier to handle.

Importance of Deductibles

Importance of DeductiblesWhen you file a claim, you will have to pay that amount from your pocket. For example consider that you select comprehensive deductible as $100 and later if you are under loss of $250, at that point of time you will have to pay $100 from your pocket and $150 will be paid from your Arizona home insurance. You have to choose the deductibles very wisely. If you select high deductibles then you will pay less premium.

  • Actual cash value or Replacement cost : After depreciation how much you claim for repair or to rebuild the damaged home is actual cash value. You should insure your house for 80% of the replacement value of the house. Depending upon the dwelling, you can choose either actual cash value or replacement cost.
  • Discounts : You can get discounts so that you can reduce your premium. All home insurance companies give you a number of discounts. Contact your agent to ask how those discounts will benefit your insurance policy. Install safety devices like anti-theft alarms,burglar systems, dead bolts so that it not only protects your home but you will fetch discounts also. If you stay near fire hydrant and fire station these factors can help you lessen your burden.
  • Packages : Different packages are available in many of the insurance companies. You get multiple coverage options and huge variety of packages. When you are selecting the coverages you should select it smartly. Medical payments, additional living expenses, property damage, personal liability are the additional coverages available apart from the basic coverages.
  • Rules and Regulations : Before you sign the agreement with Arizona home insurance, check all the terms and conditions, because every policy will have its own set of rules and regulations. Always keep the policy in safe place and remember the name of the insurer.
  • Right Source : Consumer publications, public library and state insurance department also help you guide about the insurer. They are unbiased and give information on what insurers charge on the products and services.