This is a very important thing to now about your insurance policy and something most of us never consider. What if my car a total loss, how does my insurance reimburse me?
Policies and terms are different between insurance companies so consider this just a guide:
Actual Cash Value or ACV is very common on auto, homeowners, renters, motorcycle and RV insurance. ACV is calculated by subtracting wear and tear and depreciation from the replacement cost. Example: if your car was worth $10,000 on a used car lot before it being totaled, but would cost $20,000 to replace with a new one of similar style and size, the ACV of your vehicle would most likely be around $10,000 – not $20,000. Rock Chips, scratches, dents, etc. can all be considered into wear and tear.
Replacement Cost – is not common with auto insurance but some carriers have been creative with options in their polices to help their insured who opt in for an additional cost. You will more often see Actual Replacement Cost with homeowners, renters and some motorcycle insurance policies. Discuss this with your insurance agent / broker to improve your policy before you’re faced with a total loss. Actual replacement cost does not calculate an items depreciation, age or wear and tear. If your insured item has this coverage, if available, and it was worth $2,000 as a used item before it was damaged but would cost $10,000 to replace brand new the actual replacement cost of your item would be around $10,000.
Discuss the options available with your broker. None of us plan on a total loss or even an accident but that’s why most of us have insurance in the first place, to cover the unexpected and worst case scenario.
We hope this helps. If we can be of any help we would welcome the chance to.
Call Schreib Insurance Group at (253) 365-6466