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Renter’s insurance provides financial protection for your belongings in case of theft, fire, natural disaster, or other perils. When shopping for renter’s insurance, it’s important to compare prices, keeping in mind that the cost will depend on whether your policy offers Actual Cash Value (ACV) or Replacement Cost Value (RCV), with the latter being more expensive. Depending on the situation, the higher premium may be worth it. If you’re looking for renters or other insurance, contact All Around Insurance Agency serving Katy, TX.
ACV versus RCV
If you suffer a loss, the amount your insurance company pays you will depend on whether your policy is ACV or RCV. For example, suppose you own a sofa purchased for $1,000 five years ago. Due to age and depreciation, that sofa might be worth $600 today, yet it could cost $1,200 to replace it with a comparable one. If you have an ACV policy, your insurance company will reimburse $600, which is today’s actual cash value. If you have an RCV policy, your insurance company will reimburse $1,200, which is the cost to replace the sofa today.
Since RCV pays out more when losses occur, the monthly premiums are higher than for ACV. Renters with more valuable belongings tend to buy RCV, while those with less expensive assets lean towards ACV. However, those who buy ACV and suffer losses generally wish they had RCV insurance.
The All Around Insurance Agency Difference
Ensuring the value of your belongings is critical, whether you rent or own. Our team at All Around Insurance Agency, serving Katy, TX, will work with you to create a plan that suits your needs. Call (281) 371-0052 today or stop by for an appointment.
