Key Coverage Spotlight: Actual Cost Value vs. Replacement Cost

One of the biggest decisions we discuss with clients is choosing between Actual Cost Value (ACV) and Replacement Cost coverage. Each has advantages, depending on your specific needs. This is important to understand because, should you ever have a claim, the amount of funds you receive will greatly depend on which type of coverage you have. Here’s a quick comparison of the two and how they work.

EXAMPLE SCENARIO: TOTAL LOSS OF A CONCESSION TRAILER
To illustrate, let’s say your concession trailer, valued at $100,000 when purchased new, is now a total loss due to a fire. With Actual Cost Value coverage, the claim payout reflects the current, depreciated market value. If the trailer has depreciated to $70,000, that’s the payout you’d receive—meaning you’d be $30,000 short if you’re looking to replace it with a new, comparable trailer.

If you had Replacement Cost coverage, however, the insurance would cover the full $100,000 (minus any deductible) to replace the trailer with a new one of the same type. While Replacement Cost coverage typically comes at a higher premium, it ensures you’re able to replace your assets fully, which can be invaluable for high-value equipment or newer items.