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Written by Adam Miller
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Insurance policyholders should research if their assets are covered by Actual Cash Value Insurance coverage or Replacement coverage to ensure their assets are properly insured.

Insuring your home, business, vehicles and other assets is not as simple as it once was. There are vast array of policy options and coverage types to choose from, in addition to the evolving laws and terminology surrounding insurance coverage. One coverage choice that can often lead to confusion is the difference between Replacement Coverage and Actual Cash Value Insurance Coverage. In today's blog post, we'll look at the two types of coverage and how they protect your assets and their value.

What is Replacement Coverage?

Replacement Insurance Coverage reimburses policyholders for the full cost of replacing the item lost, instead of reimbursing for the value of the item at the time of the loss based on age, use or condition. The insurance company determines the cost to replace the damaged, stolen or destroyed items and reimburses based on today's current market value. For example, if a burglar steals a television from a home or business, Replacement Coverage would reimburse the policyholder for the amount to replace the television with either the exact same model, or the most similar model, with no regard to the depreciation of the television over time.

What is Actual Cash Value Coverage?

Actual Cash Value Coverage takes into consideration an item's depreciation before reimbursing for loss, theft or damage. Depreciation is the decrease in an item's value over time and due to age, wear and usage. When policyholders have Actual Cash Value Coverage, this means they will be reimbursed for the original value of the item minus the depreciation over time. For example, if a personal or business laptop is stolen, and was originally purchased three years prior, then Actual Cash Value Coverage would reimburse the policy holder for what the policyholder would pay in today's market to replace the item, minus three years of depreciation.

Which Kind of Coverage Should I Choose?

In Texas, many types of insurance coverage are issued on an Actual Cash Value basis unless specifically stated in policy documents. However, policyholders in Texas will sometimes have the option to choose and pay for Replacement Coverage instead, which can be essential for policyholders with rare or vintage assets that want extra financial protection from loss, theft or damages.

Navigating the complex world of insurance coverage can be daunting, which is why policyholders should never go at it alone. The friendly and knowledgeable agents of Aegis Insurance Agency strive to provide custom insurance solutions that protect assets and offer quality coverage at affordable rates. Aegis can help clients determine their insurance needs based on their assets, financial situation, family needs, business industry, and then develop a tailored policy that offers great protection for long-term peace of mind. Contact Aegis today at 713-850-7622 for more information, or go online to request a free quote!

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