Hanlon & Associates is on a mission to answer YOUR questions about insurance coverage. This week, we have been asked by a client:

What is the difference between “Actual Cash Value” and “Replacement Cost?”

Join Tucker and Callie as they walk you through the answer regarding your insurance policy in the video below. If you have a question you’d like answered on Ask An Agent, contact us at 218-491-7855 or email info@hanlonandassociates.com.

Video Transcript
Callie: Hi guys, this is Callie, personal lines specialist here at Hanlon & Associates. We are here with Tucker Hanlon answering some of the questions that are pretty normal around the office and with our clients. The first one today is “Tucker, could you explain the difference between actual cash value vs replacement cost?”
Tucker: Sure. Most of the time this question pertains to homeowners insurance. Although it can pertain to auto as well. Basically, where we see it coming into play most often is when we’re dealing with roof claims. Insurance companies realize that roofs are more susceptible to wind and hail claims as they get older over time. As they get older, some companies say they’ll cover it as “actual cash value” which means they’ll cover at depreciated amount of those shingles. Quick example: if you have a 30 year shingle and it was 15 years old, and a hailstorm comes through and knocks it out, it’s halfway through its life cycle. Therefore ,the insurance company would pay half of what it would cost to replace those shingles, minus your deductible as well, and that’s the check you get. Whereas replacement cost, they would pay to fully replace your shingles minus your deductible.
Callie: If you guys have any more questions or think of anything else you’d like us to answer here at Hanlon & Associates feel free to give our office a call or visit our Facebook page. Thanks!

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