Insurance Agent, Farmers Insurance, San Francisco Bay Area
There is really only 1 renters policy. However, the coverage included can vary. Some policies are written on an Actual Cash Value basis, where other policies are written on a Full Content Replacement basis. Let me explain the difference.
Let's say you went out and bought a brand new TV that cost you $1000 today. Three years from now, it gets damaged and you submit a claim under your Renters policy. On the Actual Cash Value policy, the claim adjuster would look up the make and model of your TV, and find that it is no longer selling for $1000. That model now sells for $400. But the $400 would be for a brand now unit out of the box, where your TV was 3 years old, so they further reduce the claim based on depreciation. You're left with $250 - and you still need to pay your $100 deductible. Not a good day.
With Full Contents Replacement coverage, the claims adjuster looks at how much you spent on the TV, not the make and model, and your claim is processed for $1000 (minus your $100 deductible). And since technology has improved over the past three years, you now have the choice to purchase the same TV you had (which is selling for only $400 now remember?) or purchase a better TV with better features than the one that was damaged. Not a bad day at all!
Although the Actual Cash Value policy will cost less, you wind up getting less in the end. Remember, just because one policy is cheaper than another, doesn't mean it's a better deal. Always consult with a licensed, professional insurance agent to help determine which policy is best for your needs.
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Let's say you went out and bought a brand new TV that cost you $1000 today. Three years from now, it gets damaged and you submit a claim under your Renters policy. On the Actual Cash Value policy, the claim adjuster would look up the make and model of your TV, and find that it is no longer selling for $1000. That model now sells for $400. But the $400 would be for a brand now unit out of the box, where your TV was 3 years old, so they further reduce the claim based on depreciation. You're left with $250 - and you still need to pay your $100 deductible. Not a good day.
With Full Contents Replacement coverage, the claims adjuster looks at how much you spent on the TV, not the make and model, and your claim is processed for $1000 (minus your $100 deductible). And since technology has improved over the past three years, you now have the choice to purchase the same TV you had (which is selling for only $400 now remember?) or purchase a better TV with better features than the one that was damaged. Not a bad day at all!
Although the Actual Cash Value policy will cost less, you wind up getting less in the end. Remember, just because one policy is cheaper than another, doesn't mean it's a better deal. Always consult with a licensed, professional insurance agent to help determine which policy is best for your needs.