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How are payouts for a claim determined?

Replacement cost value

Determined by the price the customer initially paid for their property. With replacement cost coverage, losses are settled for the cost of an identical or comparable item, with no deduction for depreciation.

Actual cash value

Determined by subtracting depreciation from the replacement cost value. Most items depreciate over time due to wear and tear. Coverage that settles with actual cash value is generally less expensive but offers a lower payout in the event of a loss.

Stated value

Stated value only applies to vehicles when a symbol can’t be used to determine value, so the value is determined by the customer. Stated value initially seems appealing because it allows the customer to pay a lower premium. However, after a loss, the customer is provided whichever is lower between the stated value and the actual cash value – and that generally means receiving a much smaller payout than if they selected agreed value instead.

Agreed value

Determined by an agreement between the agent and customer during the quoting process, considering a variety of factors, such as current market value, mileage, age, condition, rarity, modifications, location and appraisal amounts.

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