Insurance for Your Valuables
Personal Property Replacements Cost Coverage
Imagine having valuable property lost, seriously damaged, or destroyed, and not being able to replace it. It happens more than you might think. Many policies only pay actual cash value, which, after depreciation, can be much lower than replacement cost. Worse, when an item is older than the depreciation table allows, you might receive no money at all.
Protect yourself. Make sure your homeowners policy provides replacement cost coverage* for most personal possessions. With such coverage, when a loss occurs, you’ll receive what you must pay today to replace the item, minus your policy's deductible. There is no reduction for depreciation.
What is replacement cost?
Replacement cost is the amount you must pay to replace your property at today's prices. With replacement cost coverage, therefore, you’ll receive the full replacement cost, minus your policy's deductible. Unlike policies which pay "actual cash value” only, there is no reduction for depreciation.
How much lower is actual cash value?
It could be a lot lower, since depreciation is subtracted. Depreciation is based on the age of the item, wear and tear, and how long it typically lasts.
For example: A television, which typically lasts 10 years, loses half its value after 5 years. With an “actual cash value” policy, you would receive only half the original value, minus your deductible; certainly not enough to replace this TV at today’s prices. Replacement cost coverage provides the current cost of a comparable appliance, minus your policy deductible.
| Item | Average Useful Life |
|---|---|
| Box spring | 20 years |
| Clothes dryer | 10 years |
| Eyeglasses | 5 years |
| Lawnmower | 5 years |
| Man's winter suit | 2 years |
| Stereo | 10 years |
| Television | 10 years |
| Woman's dress | 3 years |
| Wood furniture | 15 years |
Is replacement cost coverage more expensive?
Yes, but when you weigh that against what you can save when replacing a damaged, lost or stolen item, the value of such a policy is clear.
*Replacement cost coverage paid is subject to policy coverage limits.
Note: This web page offers a brief description of coverages, services, and programs. Actual coverages and availability may vary by state. Options, credits, and discounts are not applicable in all states. For exact terms, conditions, exclusions and limitations of coverages, please refer to your policy or contact your local Agent. For additional information, please refer to our legal notices.
