![]() ![]() ![]() This loss of value over time (called depreciation) can be estimated using math. You pay way less for thrift store stuff than brand-new stuff for a reason. That couch soaks up a few too many grape juice stains. Over time, the value of almost everything declines. It’s the actual cash value of an item, as opposed to what it would cost to replace that item with a brand-new version. Request a Quote What Is Actual Cash Value?Īctual cash value also means exactly what it sounds like. (Replacement cost has nothing to do with the value of the land beneath the building.) Some replacement cost policies may also include money for you and your family to stay in a hotel while your home is rebuilt.ĭon’t confuse a home’s replacement cost with the amount you paid for it when you bought it-replacement cost is a much more stable number based on the cost of materials and sometimes labor and design costs, whereas the real estate value of a home can vary wildly based on your neighborhood’s desirability, hot or stagnant housing markets, and a bunch of other big-picture factors.Ī home’s replacement cost is the cost of rebuilding, pure and simple. In that case, the replacement cost is the cost of the materials and labor needed to rebuild the structure. You can look up the same brand and model online (or, if the item is no longer sold, its closest match) and see what it’s selling for at your favorite stores.įiguring out the replacement cost of your home and other buildings is a little trickier. When it comes to things like TVs, jeans and couches, it’s pretty easy to estimate replacement cost. If your couch burns to a crisp in a house fire, then it’s-well, we think you get the picture. If your favorite pair of blue jeans gets ruined in a flood, it’s the cost of-you guessed it-buying a comparable pair at the store. ![]() If your TV gets fried by a lightning strike, it’s the cost of buying a comparable model at the store. It’s the cost of replacing something with a brand-new version. Replacement cost means exactly what it sounds like. ![]()
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