At Wren, because we are protection minded, we always quote our home insurance policies using Replacement Cost Value (also known as RCV) on contents, versus Actual Cash Value (ACV). RCV is equal to the amount it would take to replace your contents at today's prices. ACV is tied to the value of each item taking full depreciation over time into account.

When clients request ACV to try to save money on their insurance premiums, while we understand, we will always take the time to try to educate them on why this isn't necessarily a good idea.

While there IS a cost difference when it comes to choosing RCV on your insurance policies, when you think about having to use this benefit should the need arise, the additional cost is definitely worthwhile. Here's a simple example showing why…

Let's say you bought a leather couch a couple years ago for $1,000.  Now, due to a claim (tied to a weather event, fire, theft, etc.), it would take $1,500 to purchase that same couch today. Having Replacement Cost Value (RCV) on your contents would cover that replacement at the full value it would cost to replace it with a new, comparable couch. In this same scenario, if you had Actual Cash Value (ACV), that couch in its current condition may only be worth $100, which is all you would receive from your insurance carrier.

As you can imagine, most items in your home lose value over time. When you add up those items, it can equate to many thousands of dollars lost in the event of a catastrophe where you find yourself having to replace a home full of contents. We don't want to see that happen to you, so we will always support the choice to go with Replacement Cost Value.

Now, in terms of those unique valuables that have the potential to GAIN value over time - i.e. antiques and fine art for example - you would want to consider having those items formally appraised and endorsed separately on your home policy, or even better, consider securing a specialty policy just for those valuable items.

We know the world of insurance can be confusing, but our hope is to educate you over time, through these articles, our newsletters, social media posts and conversations with you over the phone and in person. Please don't ever hesitate to reach out to us anytime. We will always be here to help you make the right choice when it comes to protecting your home, your valuables and your loved ones.