Basis of Claims Payment

There are two compensation responses to a loss: Actual Cash Value and Replacement Cost. Most insurance coverage will be subject to a deductible. This is the monetary portion of the risk that the insured is prepared to self-insure. It is as a cost saving measure to both the insured and the insurance company. A higher deductible will normally correspond to a premium saving for the insured unless there are mitigating factors. Correspondingly, the insurance company can save on expenses by not having to adjust smaller losses.

Actual Cash Value

Watch this video to learn about actual cash value.

Replacement Cost

Watch this video to learn about replacement cost.

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