actual cash value and replacement cost

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PostPosted: Mon Oct 17, 2005 5:09 am   Post subject: actual cash value and replacement cost  

Can you tell me which one among the actual cash value and the replacement cost is the more common for an insurable property?

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PostPosted: Tue Oct 18, 2005 4:04 am   Post subject: actual cash value and replacement cost  

The commercial properties constructed in the last 20 years to be insured for replacement cost. This provides the owner to replace the damaged property at today's cost. In contrast the actual cash value provides the coverage on properties that were constructed 20+ years ago. The replacement procedure is done as: today's value of the damaged property minus the depreciation cost due to wear and tear of the structure.

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Joined: 04 Oct 2005
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PostPosted: Fri Dec 09, 2005 9:21 am   Post subject: The common method  

Actual cash value is defined as: (Current replacement cost – depreciation).

Depreciation is calculated on the basis of age, condition, time in use of a property. Replacement cost is that cost to replace or repair of an insured item at current prices. If you have the personal property replacement coverage, insurance company will provide the total cost to repair or replacement.

For the insurance companies the actual cash value method is the more common one in determining the amount of settlement for a loss.

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