Deductible
This is the money you have to pay out-of-pocket on a claim before the policy pays the loss. This applies to coverage for your home and personal property and is paid on each claim.
For example, if your roof sustains damages worth $10,000 and you have a $1,000 deductible, you are responsible for $1,000 of the total. Your insurance company will evaluate the other $9,000.
Replacement Cost versus Actual Cash Value
This will determine how much your insurer pays after a loss.
Replacement Cost
- Pays to repair or rebuild using similar materials
- Does not factor in depreciation
Actual Cash Value
- Accounts for age, wear, and tear
- Pays for the loss but usually doesn't pay enough to fully repair or replace damage
