| 2. WHAT IS THE DIFFERENCE BETWEEN ACTUAL CASH VALUE, REPLACEMENT COST AND MODIFIED OR FUNCTIONAL REPLACEMENT COST? |  |
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Replacement Cost is the amount to repair
or replace the damaged property using materials of like
kind and quality, without deduction for depreciation.
Depreciation is the loss of value that develops as an item
ages or wears. Actual Cash Value is the replacement
cost of an item, less the amount for depreciation. A new
option available to consumers is modified or functional
replacement cost. At the time of a loss, modified
replacement cost will restore the home to a functional
condition. This may mean that unique features in your home
prior to a loss will be replaced with items that serve the
same function, but are not aesthetically the
same.
Source: Massachusetts Department of Insurance
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For information about Lynch Insurance please contact:
William Lynch |
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