All policies contain a Basis of Claim Payment Section. It is very important to understand how the terms of your policy is to compensate you in the event your property sustains loss or damage. Basically, there are two (2) options: Actual Cash Value Replacement Cost If you purchase an Actual Cash Value Policy you will not be entitled to recover the full cost of repairs. Rather, your claim will be limited to the Actual Cash Value of the full cost of repairs. If you purchase a policy that affords coverage on a Replacement Cost basis, you will be entitled to recover the Full Cost of Repairs after you have affected repairs. Until you have affected repairs your claim will be limited to the Actual Cash Value of the full cost of repairs. The term “Actual Cash Value” will be clearly defined in your policy. Some policies define this terms as follows: “Actual Cash Value” will consider the cost to repair or replace the lost or damaged property, whichever is less, with new materials of similar kind, quality, and usefulness, but with proper deduction for depreciation. In determining the proper deduction for depreciation, “we” will consider: The condition of the property immediately before the loss or damage; The use of the property and its obsolescence; Its resale value; and Its normal life expectancy The terms “Replacement Cost” will be clearly defined in your policy. Some policies define this terms as follows: "Replacement Cost" means the cost, at the time of loss, of repairs or replacement (whichever is lower), with new property of similar kind and quality and usefulness, without deduction for depreciation. It is very important for you to understand how your policy pays out after a loss. Nothing you can do about the way in which your policy pays out after a loss. To learn more about Basis of Claim Payment become a member. Contact us by email or telephone. Our website is currently under construction.
