Homeowners insurance policies can either pay for replacement cost or actual cash value. At HomeFirst, most policies we write insure your home for the replacement cost. We believe that you should have enough coverage so that if something were to happen your homeowners insurance could compensate for the damage done.
What is the difference between Replacement Cost and Actual Cash Value (ACV)?
Replacement Cost is the cash amount needed to replace your home in today's market prior to the damage that caused the claim to be filed. The Actual Cash Value is the Replacement Cost minus the home's depreciation or decrease in value due to the home's age, foundation, additional features, etc.
How does Replacement Cost Value and Actual Cash Value pay out when you file a claim?
When a claim is filed under a Replacement Cost insurance plan, typically the company will pay out the Actual Cash Value to begin the repair/replacement minus the deduction, for depreciation. Once the repair/replacement is complete, the customer will need to submit a receipt showing the amount paid to restore the condition. Once this has been reviewed, the company will pay the remainder of the Replacement Cost.
When a claim is filed under an Actual Cash Value plan, the company will pay out the amount they feel the home is worth after both depreciation and the deductible have been accounted for. If the repair/replacement costs are more than the amount paid, the difference will not be compensated for.
How do I find out the Actual Cash Value of my home?
To get an estimate of what your mobile, manufactured or modular home's current value is, you can purchase a value report from NADA. If you would prefer a third-party opinion about the value of your home, consider hiring an appraiser to do an inspection.
Visit Clayton Homes to learn more about estimating the value of your manufactured home.