A Homeowner and Renter’s
Biggest Insurance Decision for Personal Property

There are two ways that your insurance company may value your personal property, at Actual Cash Value or  at Replacement Cost.

To decide which is best for you:

First, you need to understand how each is calculated, and second, you need to decide if the extra insurance associated with Replacement Cost is worth the extra money. Your insurance agent should give you an option on which option to select when you take out your policy, but if your policy is already in effect, just check the fine print or call them and ask. You can normally change the coverage by contacting your insurance company, if needed.

Replacement Cost Coverage:   

If you sign up for Replacement Cost Coverage, the insurance company will value property at what it costs to replace your property at the time that you file the claim. For example, let’s say that you bought a 55-inch HDTV in 2017 and filed an insurance claim in 2019. The insurance company will reimburse you for the amount it costs to buy a 55-iinch HDTV when you filed your claim in 2019.

So, if you incur a loss and you have Replacement Cost Coverage, you would value your items at what it would cost to replace them today. For common household items and furniture, the best way to do this is to check the current retail price of the item or a substantially similar item. You can check prices in the store or browse the store’s website for prices.

Cash Value Coverage:

If you choose actual Cash Value Coverage, the insurance company will value the property at the replacement cost of the item less any depreciation. If you filed a claim for the same TV with this coverage in 2019, the insurance company would reimburse you for the current cost of a two-year-old 55-inch HDTV that’s in the same condition as yours was.

To be clear, if you have actual cash value coverage, value your items at the price you would pay to buy them at the date of the loss and in their current used condition. Potential sources for prices include:

· Auction websites like eBay

· Yard sales

· Craigslist

· Thrift stores

· Used-furniture stores

· Auction house listings.


Check the fine print on your policy. Either way, your insurance company will require an inventory list for your loss claim, and documentation to substantiate the value and condition of each item.

Yes, that’s right: the dreaded documentation requirement. It seems unfair that the insurance company doesn’t care so much about you having documentation while you are paying them your premium, … but when you have a loss and want what you’ve been paying for all along (i.e. your money), then THEY want documentation.

Ok, now you might ask, “How much documentation do I need?”

That really depends on your insurance company, the value of each item, and the value of the total claim. As you might expect, the more valuable the item, the more documentation that may be required. The Good News is there is a quick and easy way to have all the info you need. Just use the iINVENTORYpro.com all-in-one software solution with compatible App’s.

Valuing Unique Items

It can be harder to find prices for unique and one-of-a-kind items; because of this, most insurance companies recommend that you get and maintain a professional appraisal for valuable items like:

· Antiques

· Art

· Collections

· Jewelry

· Silver and gold

Professionals agree that it’s a good idea to get an appraisal for valuable one-of-a-kind items, and to explain why you’re getting the item appraised. An appraiser may value your item differently for insurance than he would for a bankruptcy, a divorce or for tax purposes.

What is Depreciation?

Depreciation is the difference between the actual value of an item and the amount it would cost to repair or replace the item. For example, the depreciated value of a 4-year-old television might be $100, which would be the amount that television would fetch if sold on the open market. However, if that television were damaged or stolen, it might cost $800 to buy a replacement. The cost difference is depreciation.

Depreciation vs. Actual Cash Value When you buy homeowners insurance, you can choose between an Actual Cash Value (ACV) policy and a Replacement Cost (RC) policy. If you have an ACV policy, the insurance company pays the depreciated value of your belongings. In other words, they would pay the $100 that your old television set is actually worth after depreciation. However, if you have a RC policy, your insurance company would pay the cost to replace your television with a new, similar television.