Replacement Cost Value vs Actual Cash Value
Replacement Cost Value vs Actual Cash Value. The current hurricane season ends on November 30. There are still two months left in which any tropical storm could flood the streets of South Florida. It was on November 9, 2020, when Storm Eta caused those major floods in South Florida. Torrential downpours associated with Eta submerged many areas of Broward, Miami-Dade, and Palm Beach underwater. A fact that should serve us as experience so as not to let our guard down.
The reality is that flooding in Florida is unpredictable, it can happen anytime, anywhere. Having insurance that protects your most valuable asset from the damage that water can cause is very necessary.
When purchasing flood insurance, you should consider whether you will choose a policy that covers you for actual cash value or for the replacement cost of the property protected. Both terms contain a great difference.
If someone prefers the policy to cover them for actual replacement cost value, this means that in the event of water damage, the insured property will be replaced or repaired without taking into account any deductions for wear and tear due to use or damage. Its age. However, to be able to choose this option you must meet three conditions.
The insured must live in a single-family home. This must be your primary residence and the flood insurance coverage must be equal to 80% or more of the total replacement cost of the home or the maximum coverage possible under National Flood Insurance Program (NFIP) insurance. in English- that is 250,000 dollars.
On the other hand, if someone chooses coverage for actual cash value, in the event of water damage, they will receive a reimbursement for the cost of replacing or repairing the insured property, less the depreciation that it has suffered due to wear and tear.
Another important part of the above information is that if the NFIP maximum limits are insufficient to protect your property, you may want to purchase private insurance with higher limits and coverage.
Don’t wait until it’s too late to get flood insurance, remember that most policies require a 30-day waiting period. Replacement Cost Value vs Actual Cash Value.