skip to content
August 7, 2023

Actual Cash Value vs Replacement Costs: Breaking Down a Property Protection Plan

Getting into the nitty gritty of tenant insurance can be tedious. With so many policies offering different kinds of plans, it can be hard to break down the details. When it comes to protecting your property, especially when it comes to self-storage, it pays to know the differences between replacement costs from a property protection plan from Tenant Property Protection® and the actual cash value you would receive from traditional tenant insurance.

Replacement Cost vs. Actual Cash Value
Replacement cost coverage offers the best protection for your property, as it pays for the actual cost of replacing your belongings at current market value. In the event of a claim, Tenant Property Protection® will pay to replace your lost or damaged property, with no deductible or out-of-pocket costs. This means that you won’t have to worry about going into debt to replace your valuable items.

In contrast, insurance pays out the actual cash value of your lost or damaged property. Actual cash value is the cost of replacing your property with something of similar quality and condition, minus depreciation and your deductible.

Now let’s illustrate an example to visualize the explanation above. Let’s say you are a tenant at a self-storage facility and have bought a protection plan from Tenant Property Protection® that you pay a minuscule monthly fee on every time you pay your storage bill.

One of the items you store is a couch that was bought 5 years ago for $1000.00. Since being in storage, the value of that couch has depreciated. Traditional insurance is going to depreciate the value of your items automatically by a certain percentage yearly. The value of the couch depreciates by 10 percent each year. After 5 years, according to insurance, that couch is now worth $500.00. If you have a $500 deductible with insurance, by the time you file a claim, you are left with no money and no couch.

With a protection plan from Tenant Property Protection®, finding a comparable replacement is easily covered. 5 years later, the same couch brand and model is now $800.00. We give you that money to buy a replacement.

Pros and Cons
When deciding between replacement cost coverage and actual cash value coverage, consider both the benefits of the type of coverage and the price. Replacement cost coverage is typically more expensive than actual cash value coverage, but it offers better protection for your property. If your belongings are important to you and you want the best protection possible, it may be worth the extra cost.

The decision between replacement cost coverage and actual cash value coverage is up to you. Before making a decision, it’s important to understand the differences between the two types of coverage, so you can make an informed decision that best fits your needs.

Tenant Property Protection® cuts through the red tape in many ways. And since we are not insurance, we aren’t at the whim of individual state laws, so our policy is the same across the nation. Think of our protection plans as an extended warranty, so you can have peace of mind while knowing you don’t have to jump through hoops to become whole again.

Tenant Property Protection® will have a brand new website rolling out this month. Not only is our new website sleek and modern, but it is easy to make claims and changes to your account, along with lots of resources to help your company flourish. Visit our new website to learn more. Get in touch with us today to see about selling property protection plans at your self-storage facility.