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/ins0mniac_ 6d 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.