How your commercial property is valued in your insurance policy directly affects how much you'll receive in a claim. Understanding the difference is essential.
Replacement Cost
Pays to replace or repair damaged property with new materials of similar kind and quality, without deduction for depreciation. This generally results in higher payouts and slightly higher premiums.
Actual Cash Value (ACV)
Pays the replacement cost minus depreciation. As your property and equipment age, the payout decreases. Premiums are typically lower, but so are claim payments.
Which Should You Choose?
For most businesses, replacement cost coverage is the better choice. The slightly higher premium is worth knowing you can fully rebuild or replace damaged assets without significant out-of-pocket costs.
Discuss your valuation options with a BlackArrow agent to find the right approach for your business.
