Valuation · Replacement cost
Replacement cost pays to rebuild. Actual cash value subtracts age.
Replacement cost pays to repair or replace with similar materials, up to the limit, without subtracting depreciation. Actual cash value pays the same repair and then subtracts age and wear. A 15-year-old roof can be a full roof check on one form and a fraction of a roof on the other. The deductible still comes off either way.
Texas version of the same split: replacement cost versus actual cash value. The ACV side alone: actual cash value.
The 80 percent condition
Many HO-3 forms only pay replacement cost on the dwelling if it is insured to about 80 percent of rebuild cost. Below that, the payment can drop toward actual cash value even if the declarations page says replacement cost. Land is not part of rebuild cost. The sale price and the county tax value are the wrong numbers. Dwelling coverage and how Texas home insurance is set.
On contents, some forms pay actual cash value first and release the rest, called recoverable depreciation, after you send repair invoices. If you do not repair, you may only see the depreciated amount. Read whether your contents are replacement cost or actual cash value. They are often not the same as the dwelling.
Cars are usually actual cash value
Collision and comprehensive on a personal auto policy almost always settle a total loss at actual cash value, not the price of a new car. “Full coverage” does not change that. Liability versus full coverage, Texas car insurance, and Texas auto products.
The home product around this: Texas homeowners, homeowners coverage, and home and household.
