On your homeowners policy you will have either actual cash value ACV or replacement cost coverage.
Replacement cost covers the cost to replace the property or items.
ACV or actual cash value is the fair market value, the amount you would expect to get if you sold the property or item.
Get quotes for both types coverages.
For example, if you purchased a home for $140,000 which represents an ACV or fair market value price of $140,000 and the cost to build the same house is $220,000 new and the house burns down and is considered a total loss.
At the time of the loss, if the fair market value is still $140,000 and the cost to build the same new home is still $220,000,
you would be paid $140,000 if you are carrying ACV coverage and if you are covered under replacement cost you would be paid $220,000.
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