Three basic levels of Property Insurance Coverage:
- Actual Cash Value
- Replacement Cost Value
- Extended Replacement Cost/Value
ACTUAL CASH VALUE (ACV) provides the policyholder’s actual cash value coverage — typically reimbursing for the depreciated value of an item. For example, if a fire damages your TV, a policy with ACV coverage reimburses you for the depreciated value, which may be less the cost to purchase a new TV. ACV coverage premiums are usually lower than RCV coverage premiums.
REPLACEMENT COST VALUE (RCV) restores the policyholder’s property in a manner closest to what it was before the loss. The insurer provides the policyholders with money to replace the damaged items at current prices.
EXTENDED REPLACEMENT COST/VALUE (ERC) extends the policyholder’s Home Insurance Policy coverage by 10%-50% of the cost to rebuild your home. For example, if your policy limit is inadequate at the time of your loss, ERC will pay beyond that limit.