DAVID PISANIC: Actual cash value is simply what something is worth right now who are at the time of loss occurred.
JEFFREY GOULD: If you are only covered at actual cash value, you are not going to have enough money to replace everything you lost. You are going to get a portion of that money and you are going to pick in shoes, what you are going to replace and what should not going to replace.
JOHN DOETZER: They take a replacement cost figure and they depreciate it based on how old that piece of property is.
DAVID PISANIC: If you had a refrigerator that you paid $100 for that was 10 years old, that refrigerator would not longer be worth $100 and if all you had was an actual cash value policy, the insurance company will only have to pay you maybe $10 for that $100 refrigerator.
JEFFREY GOULD: If you have replacement cost coverage, then you are guaranteed to have the money to replace everything that you lost in your house regardless of what it costs today compared to what you originally paid for or what it might be worth in its present state.
JOHN DOETZER: We will buy you something new regardless of how old your personal property is.
DAVID PISANIC: Then even though it cost $500 now to replace that refrigerator, the insurance company has to give you that $400 or $500.
JEFFREY GOULD: Even if you are covered for replacement cost, most policies say you only get the actual cash value until you actually replace the item.
DAVID PISANIC: And in order to do that, you have to get something of the same like, kind and quality as you had before.
JEFFREY GOULD: If you agree with the insurance company that the actual cash value of that shirt is $20$, they give you $20.
DAVID PISANIC: Upfront, you are going to get only the actual cash value.
JEFFREY GOULD: If you go out and buy a shirt for $20, they do not owe you any more money. If you go out and buy a shirt for $25, they owe you $5 more dollars.
DAVID PISANIC: Then you submit that receipt to the insurance company and the difference between what the actual cash value was and what it costs you to replace it, they will write you a check for that. And that is how that works.