Written by Andy Gurczak

March 11, 2022

What is Actual Cash Value Coverage in a Homeowners’ Insurance Policy?

If a fire or hurricane has severely damaged your home and its contents, you will file a claim with your home insurance company for the covered loss. If you have never had to file a claim before, you may assume your insurer will pay the full cost of replacing or repairing your damaged home and personal items. However, you are about to learn what is actual cash value coverage in a homeowners’ insurance policy and what it means.

Actual Cash Value vs. Replacement Cost

Your homeowners’ insurance protects the structure of your home (dwelling coverage) and its contents (personal property coverage). Therefore, if a covered peril, such as a fire or a hailstorm, damages your property, your insurance company will pay the cost to replace or repair your damaged property. 

However, how much they will pay depends on whether you have actual cash value coverage or replacement cost coverage. 

Actual cash value (ACV) coverage will pay you the current value to replace damaged or stolen property. For instance, a fire could have destroyed your refrigerator. You purchased that refrigerator five years ago for $800. But today that five-year-old refrigerator is only worth $400. Consequently, your insurer will only offer to pay you $400 for a new refrigerator.

The insurance company determines actual cash value by deducting for depreciation in the value of an item, wear and tear, etc. 

On the other hand, if you have replacement cost value coverage, the insurance company will pay an amount to cover the cost of purchasing a similar refrigerator of like quality. 

In most homeowners’ policies, dwelling coverage also provides replacement cost coverage to repair or replace damage to the structure of the house. For instance, a storm damages your 15- year-old roof, you will get a new roof (or section of a roof).

Conversely, most policies only provide actual cash value coverage for damaged personal belongings. 

Of course, if a homeowner wanted replacement cost coverage for his personal property, he could get it-at a price. He can contact his insurance agent to get that coverage added to his homeowners’’ policy, but his premium payment will go up. Therefore, it’s as if you wanted to get $100,000 more life insurance coverage. You can do it, but you will have to pay for it.  

How Will You Get Paid If You Have Replacement Cost Coverage

Typically, the insurance company will make the replacement cost payment in two stages. First, they will make a payment equal to the actual cash value of the damaged property.

Next, the insured purchases the replacement items or repair the damaged property. 

Once the item has been replaced, or the damage repaired, the homeowner sends the insurer a copy of the receipt for the new item or the repair bill. Then the insurer will send a second check, representing the depreciation, to the homeowner. 

The insurance companies use this two-step payment process to make sure the homeowner actually goes purchases the replacement item and/or makes the repairs to the damaged property. 

Indeed, insurers offer replacement cost coverage to homeowners for personal property. But, again, the homeowner will have to pay for it. 

If You Need a Public Adjuster, Call AllCity Adjusting

We are a family-owned claims company with five decades of combined adjusting experience. If there’s one thing we understand, it’s that you need 100% of your claim value.

Insurance companies undervalue your claim 8 out of 10 times. Additionally, they hire expensive claims adjusters to ensure they maintain a strong profit margin. Moreover, they have experienced actuaries that help their team of agents challenge your insurance claim’s validity and value.

You have already gone through a tumultuous event. Therefore, get an agency that gets you more during the claims process.

Replacement Cost vs. Actual Cash Value

Whether your policy provides you with actual cash value or replacement cost value coverage, we work to ensure you get 100% of your claim value. With over 50 years of combined adjusting experience, we know insurance companies and understand where they cut corners. As a result, we help you build a larger claim, maximize your claim value, and get you back to normal fast.

Don’t get fooled, get the company that gets you more. Call us today at 844.692.3587 or visit our website to find an office near you.


free claim review

Best way to beat the insurance company is to hire AllCity Adjusting

At AllCity Adjusting we help residential and commercial clients alike get the claims support they need. Moreover, we have over 50 years of combined experience helping get our clients the max settlement time and time again. If your claim has been low balled or denied entirely we can help increase your maximum settlement. Call us today for a FREE consultation. Experience the AllCity difference.

public adjusting call support

Real Support When You Need It!

Should You Make Your Own Insurance Claim Repairs?

Let’s say you had a small fire in your home. Faulty electrical wiring caused the fire. Of course, someone will have to tear down parts of the wall where the fire started. Then someone will have to hang new sheetrock and paint it. You’re pretty handy around the house. You’re thinking, should you make your own insurance claim repairs? Is there any way to get your insurance claim check faster?

What Are Some Common Business Insurance Claims?

Certainly, almost all businesses, from large corporations to mom-and-pop stores, will probably face some type of accident or incident that will become an insurance claim. Below we will discuss some common business insurance claims that businesses across the country must confront.Is there any way to get your insurance claim check faster?

How Does Home Repair Insurance Work?

How Does Home Repair Insurance Work?

Homeowners’ insurance will cover damage from unexpected and sudden perils, like hurricanes, fires, and hail. However, it excludes insurance coverages if the damage stems from everyday use and wear and tear to appliances, HVAC systems, etc. Therefore, if you feel you need insurance coverage for those items, you need to know the answer to the question: how does home repair insurance work?

How to File a Roofing Insurance Claim

How to File a Roofing Insurance Claim

Your roof is the primary protection for your home from the elements. Of course, the wind is probably the most dangerous element to your roof. However, roofs also get damaged by falling trees, electrical poles and wires, hail, and heavy snow. If a storm or some other unexpected event damages your roof, you will have to know how to file a roofing insurance claim.

How to Get Flood Insurance

How to Get Flood Insurance

Homeowners’ insurance protects homes from damages caused by fire, hurricanes, windstorms, and other natural disasters. However, standard homeowners’ insurance does not cover damages caused by floods. Consequently, homeowners and renters who live in a high-risk zone for flooding need to know how to get flood insurance.

commercial mold cleanup and restoration

commercial mold cleanup and restoration

If you have found mold in your business, you should be concerned. For instance, properly removing mold can be expensive and difficult to do correctly. Mold in your business can be dangerous for your health, and that of your employees, customers and visitors. However, commercial mold cleanup and restoration is necessary if you want to keep operating your business.

Stay Up to Date With The Latest News & Updates

Don't Wait - Get More

Get a free 1 hour consultation on your next call. So call today and challenge the insurance company narrative on your policy claim. We can help you with all your public adjuster claims support. Let us help you get more.

public adjuster service areas background

Join Our Newsletter

Do you want to learn more about public adjusting. In this newsletter we create helpful tips and hints and you will receive notifications when we post new articles.

Follow Us

Follow us on the following social networks.

Call Us Now

All City Adjusting

All City Adjusting