David Pisanic: Actual cash value is simply what something is worth right now, or at the time that the loss occurred.
Jeffery Gould: If you are only covered at actual cash value, you are not going to have enough money to replace everything you lost. You are going to get a portion of that money, and you are going to have to pick and choose what you are going to replace and what you are not going to replace.
John Doetzer: They take a resplacement cost, figure, and they depreciate it based on how old that piece of property is.
David Pisanic: If you had a refrigerator, that you paid a $100 for but was 10 years old, that refrigerator would no longer be worth $100. And if all you had was an actual cash value policy, the insurance company will only have to pay you may be $10 for that $100 refrigerator.
Jeffery Gould: If you have replacement cost coverage, then you are guaranteed to have the money to replace everything that you lost in your house regardless of what it cost today comparative to what you originally paid for, or what it might be worth in its present state.
John Doetzer: We will buy you something new regardless of how old your personal property is.
David Pisanic: Then even though it costs $500 now to replace that refrigerator, the insurance company has to give you that for $500.
Jeffery Gould: Even if you are cover for replacement cost, most policies say you only get the actual cash value until you actually replace the item.
David Pisanic: And in order to do that, you have to get something of the same like kind and quality as you had before.
Jeffery Gould: If you agree with the insurance company, if the actual cash value of that shirt is $20, they give you $20.
David Pisanic: Upfront you are going to get only the actual cash value.
Jeffery Gould: If you go out and buy a shirt for $20, they don't owe you any more money. If you go and buy a shirt for $25, they owe you five more dollars.
David Pisanic: Then you submit that receipt to the insurance company and the difference between what the actual cash value was, and what it cost you to replace it, they will write you a check for that, and that's how that works.
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