An old television advertisement for MasterCard used to list the cost of small items, and then one large experience which was marketed as ‘priceless’. As we all know, many of our personal heirlooms carry with them a significant sentimental value that can never be measured by money alone.
However, it is important to know the actual cash value, also known as ACV, so that you can be properly compensated if your personal property is lost as a result of theft or other damage.
In one recent case, a client was requesting some more information about the actual cash value coverage she would receive from furniture of hers that was destroyed in a home fire. The fire destroyed wooden furniture which had an estimated life period of five years, and cost about a thousand dollars to replace. She additionally queried into the replacement value of a family’s personal property through the loss of the fire, which totaled about $18,000. One catch here is that the replacement costs of those items had increased by fifteen percent, and she was hoping to factor this additional cost into the replacement funds she would receive for her personal property.
One quick response to this question is that the ACV and replacement cost formulas that insurance companies use to determine your payout after a loss and damages vary depending by company, so there’s no set way to fully determine how much it will actually be without providing all of the necessary information to the company itself during your consultation. However, there are a couple of ballpark figures that can be used to estimate the costs for this particular case.
Generally, solid wood furniture has a life span of up to 20 years, which depreciates about 5% each year due to general damages, the wear and tear of being in an active household. For $1,000 worth of furniture, it would be valued at roughly $800 after two years, as was used in the above example. Another furniture life span to be considered in pressed board type, which has only about a ten year life span, but can be calculated to depreciate at roughly the same speed as other types of wooden furniture.
Key in these types of value-based questions is the initial cost of the items, as well as their value to you individually. If the furniture or other destroyed items were given as gifts, they would not necessarily have cost you anything out of pocket, but you should still be eligible to receive compensation for their destruction in a fire. ACV is generally associated with the price needed to replace the items with either identical or substantially similar pieces. This would cost the same for an insurance agency or an individual to replace.
For a free quote from Berliner-Gelfand & Co, Inc., call us today at our Monroe, CT offices at 203-367-7704. We can also be reached by email at info@berlinerinsurance.com, and guarantee a fast response for our clients. We are looking forward to speaking with you about coverage and replacement for damages done to your personal property.