If you’ve made the smart decision to carry N.J. renters insurance, you may be wondering how to determine the appropriate amount of coverage that you need. The answer will depend upon whether you choose full replacement cost or actual cash value, in the event of a loss.
Replacement Cost Value vs. Actual Cash Value
Replacement cost value (RCV) allows you to replace your covered belongings at the cost that it would take to buy them in the current marketplace. Depreciation is not taken into consideration with RCV.
Actual cash value (ACV) is based on depreciating your belongings for the wear and tear of having owned them for a period of time. Although selecting this method will save you some money on your insurance premium, it will not pay out enough for you to purchase the item in full in the current marketplace, in the event of a loss.
What Items Are Covered?
In determining the amount of coverage that you need, be sure to include items such as furnishings, rugs, appliances, lawnmowers, clothing, cookware, china, electronic equipment. You may also want to carry liability coverage to protect you from lawsuits in the event someone is injured while visiting you. Also, if you have valuables, such as art or fine jewelry, these can be added to the policy by a floater. Once you have everything listed, you will want to apply one of the two methods, RCV or ACV, to determine you’re the appropriate amount of coverage.
When calculating how much N.J. renters insurance to carry, list all items needing coverage and determine a method for replacement, RCV or ACV. An insurance agent can answer any questions and help you tailor a policy to your needs.