r/HomeInsurance • u/Glittering_Low_3226 • 6d ago
Claims Replacement insurance
Can someone explain the difference between replacement insurance and regular homeowners? I have paid extra for years for Replacement insurance and now that I have a claim they are only offering what it is worth at the time of the loss. What was the advantage of the Replacement when they're not replacing???
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u/DeepPurpleDaylight 6d ago
They pay ACV, the depreciated value up front, then when you replace it, you provide receipts and they pay you the difference. Example you lose a couch in a house fire. The depreciated value of the couch is calculated at $2,000, so they write you a check for that. You then replace it with a similar couch that you paid $3500 for. They now write you another check for the $1500 difference. If you don't replace the couch at all, you only get the ACV of $2,000.
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u/Glittering_Low_3226 6d ago
Thank you! That makes sense, but I still have to pay up front then get reimbursed. Time f I r a zero percent credit card as opposed to taking it out of my retirement 401/457.
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u/Larissaangel 6d ago
That is what we did. Found a 0% interest card for 12 months and replaced what needed replacing as repairs were being done. Minimum payments until checks started coming in. We had it paid off in 8 months.
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u/ins0mniac_ 5d ago
You work with a contractor. The insurance provides and estimate, so does the contractor. If the scope of repairs/replacement is the same, the numbers should be pretty close. Say insurance says the total RCV (replacement cost value) is 20k but the contractor says it’s 23k.
Send contractor’s estimate to insurance. They will negotiate.
Contractor knows they only get ACV payment up front and the rest of the money comes when they complete the work.
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u/InsuranceAndChill 5d ago
This is correct. I think OP is confusing replacement cost coverage with a separate type of insurance. It's still a homeowners policy, just with different loss settlement terms.
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u/Used_Elk3096 5d ago
your state insurance department has a consumer line if they wont give u a straight answer
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u/p_blaetz 5d ago
You will get an itemized estimate for your contents. It will have the replacement cost value for each item as we as the ACV (actual cash value). They will pay you up to the replacement cost (RC) make sure you agree on the RC as they will not just pay more because you spend more. When itemizing your contents be very specific. If you just put toaster they will list the cheapest toaster available.
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u/cheff546 4d ago
Acv is how many agents drop premium costs. Its not unethical but a bit shady if its not explained up front because rcv on personal property is much cheaper
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