Understand value, limits, and deductibles

Replacement cost and actual cash value are different settlement methods. Replacement cost generally uses the cost of repairing or replacing covered property without deducting for depreciation, subject to the policy. Actual cash value generally subtracts depreciation for age or condition. Even a replacement cost policy may initially pay a depreciated amount and require completed repairs or replacement by a deadline before paying more. Roofs and belongings can have different terms.

A deductible is your share of a covered loss. Some policies have separate wind, hail, or hurricane deductibles. A percentage deductible is often based on the dwelling coverage limit, not the repair bill; check its stated basis. Limits also cap payments, and valuables may have special sublimits. For dwelling coverage, rebuilding cost differs from a home’s sale price or remaining mortgage. Review estimates after renovations or changes in local construction costs.

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