How does renters insurance work when you need to replace your property?
There are two kinds of payouts: actual cash value and replacement cost coverage.
Actual Cash Value. This type of coverage pays an amount equal to the current cost to replace your items minus the depreciated value.
Replacement Cost Coverage. This type of coverage pays you the amount it would cost to replace your lost or damaged property. You only get the money if you replace the items. There is also usually a limit on how much money you receive, and the premiums tend to be higher.
Deductibles. This is the amount you pay for the lost or damaged goods, before the insurance company would begin paying. Typically, the higher the deductible, the cheaper your policy will cost.
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