Replacement Cost vs Actual Cost Value

Many insured’s are confused about the difference between replacement cost and actual cost value. At North American Advantage Insurance Services we think you should know exactly what you are getting when buying homeowners’ insurance, and are pleased to offer this simple explanation.

Actual value cost is what your home would be worth on the market at any given time. It will reflect the value of your house in the current housing market. If the market is good, value will be up. If the market is slow, the value will be less.

Replacement value is a far different approach. Replacement value takes into account the construction costs of replacing you home if a total loss should occur. This includes the considerable expenses of demolition of your current, damaged structure, and removal of all debris. It also includes the preparation of your property for reconstruction. It will restore your property.

Many people who have suffered catastrophic losses were unable to rebuild their homes due to the fact that they insured their homes for actual value vs. replacement value. Don’t get caught short. Make sure your damaged property is fully covered. Contact us at North American Advantage Insurance Services for a complete review of your homeowners insurance policy.