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Highway TrafficOwning a vehicle is one of the best feelings in the world. It gives you the freedom to do whatever you want whenever you want. Yet, as you roll your new vehicle off the lot, its value depreciates significantly. For this reason, it helps to take a few minutes to consider the type of auto insurance you are carrying on your vehicle. Specifically, consider what the replacement cost or actual value cost is and how these values apply to your car insurance.

If you have auto insurance, the policy will specifically state if you have actual cash value or replacement cost coverage. It's important to know the difference.

The difference applies if your vehicle is damaged significantly under a covered incident claim and is likely to be unusable going forward. It also determines the amount of money the insurer will give you in such an event.
  • Actual Cash Value Coverage provides you with the fair market value of your vehicle. That is, it reduces your vehicle's costs based on depreciation. Rolling that car off the lot leads to significant depreciation in its value, for example. If you sold your car, in its non-wrecked condition, what would you get for it?
  • Replacement Cost Coverage provides you with the amount of money it would take to purchase the new item at the time of your claim. In other words, there is no depreciation factored into this claim.
    So, which is the best option for you? This depends on the value of your car and the budget you have for auto insurance.
Personal property replacement coverage tends to be ideal when you need to replace your vehicle outright and need to recoup as much of the lost value as possible. Actual cash value coverage might be less expensive, but it could provide less support if your vehicle suffers significant damage. It's important to choose car insurance that meets your specific needs and offers you the level of financial support you need on an ongoing basis.

Are you covered? Call Cloverleaf Insurance at (800) 530-5822 for more information on the auto insurance policies we offer.
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