When you’re discussing a new renters insurance policy with your insurance company, you’ll probably choose between two different types of personal property coverage:
Actual cash value
Replacement cost coverage
In a nutshell, actual cash value coverage compensates you for what your items are worth in used condition. Your insurance premiums will be lower, but if your items are stolen and destroyed, you’ll be compensated for worn clothing and bedding, old and depreciated computer equipment, and so on. As a result, it’s likely that your insurance settlement won’t provide sufficient reimbursement to purchase new replacements.
With a replacement cost policy, you’ll pay higher premiums, but you’ll be compensated for what it costs to replace all your old possessions with new ones.
