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Home with Dollar BillsIf you've ever shopped around for an Albany Georgia Homeowners Insurance Policy, you know that the premium one company quotes can vary tremendously from the premiums other companies quote. That's true even when companies use the same home value estimate and input the same data to come up with their premium quotes. A major reason for this discrepancy is that insurance companies calculate reimbursements differently. If you can't answer the question, "How do homeowner's insurance reimbursements work?"You need to learn!

Replacement Cost Vs. Actual Cash Value Reimbursements


Some insurers operate with an out-of-pocket replacement cost reimbursement policy. If your $300,000 home is leveled by a tornado and it will cost you $300,000 to have it rebuilt on the same site, a replacement-cost reimbursement policy would pay you $300,000. On the surface, that sounds ideal. The major drawback of such a policy is that your premium would be very expensive. For many homeowners, the premium for this type of policy is prohibitively expensive. Instead, they opt for an actual cash value reimbursement policy that has a less-generous payout after claims but much lower premiums.

How Do Actual Cash Value Reimbursements Work?


With actual cash-value reimbursements, an insurer will calculate a depreciation number associated with the item in question before writing you a check to replace it. Consider your roof, for example. Let's say you've lived in your home for 30 years and had your roof replaced a decade ago. The cost to replace it today is about $7,000. (According to Home Advisor, the average cost of a new roof is $6,708. A violent hailstorm rolls through and severely damages your roof and you must replace it right away so it doesn't leak and cause more damage. An adjuster will determine the expected lifespan of your type of roof. Let's say that is 20 years. You have had your roof for 10 years. So, in their eyes, the depreciation is half the cost of the roof. You will be paid $3,500 toward a new roof. A replacement cost policy would have paid out $7,000. But you would have been paying higher premiums all of those years.

Which policy is best? There's really no one-size-fits-all answer. The smartest approach is to align yourself with an insurer you trust and work with them to get a policy that makes the most sense for you. If you are in the market for a home insurance policy or wish to make sure your existing policy is competitive, contact Fleming & Riles Insurance at (800) 833-4379. We're confident you'll be happy with the Georgia home insurance policy we'll create for you, your premium, and our reimbursement policies.
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