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What is an Actual Cash Value Policy?  When would an actual cash value policy benefit me?

See below for transcript.

This is Derek from Clark Carroll
Insurance Agency, and this video is going
to talk about actual cash value policies
and what that means, how they're used and
when it might be a good option for you
when you're purchasing an insurance policy.
What is an actual cash value  policy?
Actual cash value is commonly referred to as ACV,
Actual Cash Value.  It is a claim
settlement process that many insurance
companies use it is not the preferred
one.   A preferred method would be
replacement cost and we have done a
video on what replacement cost is and
how you calculate that in the past so I
highly suggest watching that.  Actual cash
value is going to do replacement cost
minus depreciation so it is a little bit more involved
An example of how an
actual cash policy would work would be
kitchen fire for example. If your fire
were to destroy the cabinets in your
home and your cabinets were 20 years old
the insurance company wouldn't that pay
for you to put in brand new kitchen
cabinets they're going to pay out what
20-year old cabinets are worth. So if you
have an actual cash value policy you're
probably not going to get new kitchen
cabinets after a fire. Another example of
when actual cash value is commonly used
would be on a roof even if you have
replacement cost on your home several
insurance companies have gone to actual
cash value on roofs that are over a
certain age, and what that's going to do
is again it's gonna pay you replacement
cost minus depreciation. So if there's a
windstorm or a hailstorm you may not be
getting a brand new roof even though you
do have replacement cost on your policy
you'll commonly see actual cash value
policies on personal property and
commercial property.  The benefits of an
actual cash value policy is that it does
help keep your premiums lower because
the claim settlements are going to be reduced by
the depreciation if you have any
questions on how an actual cash value
policy works give our agency a call
Clark Carroll Insurance Agency

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