Replacement Cost vs. Actual Cash Value
When insuring your car, there are many factors to consider. From deciding if you need the extra comprehensive coverage, to deciding on your liability limits, it can be confusing to make sure that you invest in the right policy. One of the biggest factors to consider is whether to insure your car for its actual cash value or replacement cost. Knowing the difference between the two coverage options can help to ensure that you have the right amount of coverage that you deserve. The actual cash value, also known as ACV, of your car is calculated by determining how much your car was worth when it was made, minus its depreciated value. It is important to keep in mind that not all cars will lose value at the same rate. If your car is totaled after an accident, your insurance company will consider many different factors to determine your payout, including the overall physical condition, such as rust and peeling paint, mileage, and the option package that you had. The replacement cost of your car is the amount of money that would be needed to replace your damaged, stolen, or destroyed car with a new one. The replacement cost does not take the depreciated value of your car into consideration when deciding on the payout. Your insurance company will provide a payout that allows you to replace your car with a new one, just like the day that you bought it. For all of your auto insurance needs, contact
the independent insurance agents at Gateway Professional Insurance Services in Vacaville, California. We will work with you to ensure that you have the right amount of protection for your car, all at the right price to fit your budget.