However some people make the mistake of buying the cheapest insurance, thinking that it’s just like every other Homeowners policy. That’s not true!
When you look at the details of your home policy, you’ll see that you are either covered for “full replacement cost” or for “actual cash value.” These are important differences.
Big difference between 'Full Replacement' and 'Actual Cash Value'
Actual cash value on the other hand, only pays what your home was worth at the time of the loss, minus any depreciation.
Here’s an example: Let’s say that your couch was burned in a covered fire claim. Full replacement insurance would buy you a new couch in the same style and value as the original was when you bought it. You get a brand new identical couch.
Actual cash value would only pay what your couch was worth at the time of the fire. The “market value” of your couch is more likely what you could have sold it for on Craigslist. You’re not going to get a new couch from the claim, but you could go buy a used one similar to the condition of yours right now.
Now imagine what a difference that makes if you were to suffer a major loss on your home!
We believe that full replacement cost is what everyone needs! So if you’re shopping for home insurance and notice that one price is substantially less than the others this could be why. Always check to see what kind of coverage you’re purchasing.
And give SAV-ON a call at 888-867-2866 to learn more and get a quote for your home.