What is “Actual Cash Value” and “Replacement Value?”

If your home was recently damaged in a hurricane, water leak, fire, or other incident, you may be wondering how much your claim is worth. However, before you speak to your insurer, do you know the difference between actual cash value and replacement value? While the actual cash value or ACV may sound like the more enticing offer, it rarely is. If you are unsure about how to proceed in filing a claim, an attorney can guide you through the process and help you sidestep any legal pitfalls along the way.

Why you should watch out for ACV offers

To the average consumer, “actual cash value” sounds like a pretty good deal. In reality, it’s an insurers’ attempt to make your case go away quickly and cost-effectively. For example, let’s say your car is totaled and your insurer offers you “actual cash value” for your car. You will not receive enough money to buy a new car like the one you lost. Instead, you will receive a “garage-sale” price for your damaged property because ACV offers account for depreciation. Instead, you should discuss a replacement value offer with your insurer. If they seem unwilling to discuss this option, consult with an experienced attorney.

Negotiating a replacement value settlement

When your home sustains significant damage, you need compensation equal to the cost of repairs. An ACV might get you a quarter of the way. Ideally, you want a replacement value settlement. With this type of arrangement, you will receive compensation for your replaced items/property.

If you anticipate a replacement value or repair value offer from your insurer, be prepared to provide a list of the following information:

  • Full descriptions of your items and property with makes and models if applicable
  • The date when you first purchased the item
  • How much the item/property cost at the time of purchase
  • Today’s current replacement value
  • Photos/videos that show the condition of the item/property
  • Original proof of purchase or receipt

It is important to understand that your insurer may have the option to repair or replace your property. If they believe your property can be fixed, they will offer you a repair value.

Schedule a consultation today

Our team of experienced attorneys at Johnson & Williams, P.A., has extensive experienced negotiating favorable settlement deals for Orange County clients. Whether you need help filing a claim, or appealing a denial, you can trust us to fight aggressively for your rights in in Greater Orlando, Winter Haven, and Kissimmee, Florida. To schedule a consultation with one our Florida insurance disputes lawyers, call us at (407) 245-1268 or contact us today.