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Loss Control Insights

Choosing the Right Property Coverage: Replacement Cost vs. Actual Cash Value

Insuring your business starts by understanding what an appropriate value would be for your building

Insuring your business starts by understanding the value of your building. How you determine that value has a major impact on your ability to recover in the event your building is destroyed by a fire, tornado, hurricane or other covered loss. The cost and level of protection of your insurance is typically based on one of the following two types of coverage:

Replacement Cost Coverage provides enough money to rebuild with the same features as your current building at your current location. If it’s a partial loss building, this coverage will pay the cost to repair or replace the damaged property with new materials without deducting for depreciation.

Actual Cash Value Coverage protects your investment in the building by providing an amount based on the depreciated market value. In the case of a partial loss, the insurance will pay for the depreciated value of the damaged property, which may be less than the cost of replacing or repairing the property with new materials.

The right coverage for you depends on a number of factors. EMC suggests replacement cost coverage and can help you determine an appropriate value with the use of a building valuation program. The program was developed by Marshall & Swift/Boeckh, a subsidiary of CoreLogic® and a leading provider of building information for the property and casualty insurance sector.

Contact your EMC agent today to request a building valuation. EMC will be able to provide updated building values on an annual basis to reflect inflation and rising construction costs. If the value of your building changes or if you enhance your property, notify your agent so your building coverage estimates the current costs to replace the building.

Count on EMC® to provide you with the information you need to determine the right coverage to protect your property.

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