Dec
28
2015

There are many risks involved when you become a landlord. While you hope that there will never be any issues with your rental or your tenants, you still want to make sure that you have the best Landlords Property Insurance available in the event you need to file a claim.

When it comes to filing claims for damages or theft of your property, there are two methods with which your insurance carrier will calculate reimbursement of the items in question.

Replacement Cost

Replacement cost means the cost to replace an item with another item of comparable material and quality. This is the most favorable method for you because it does not take into account usage of the old item. In other words, if your camera is stolen, the insurance company will reimburse you with the full cost of a new camera of the same kind. Your insurance company will not factor in the difference in value that wear and tear has on the camera.

Actual Cash Value

Also referred to as ‘market value’, actual cash value means the amount the insurance company will pay to replace the item with a like kind minus depreciation. This means that the insurance company would pay what the item is worth were you to try and sell it on your own, taking into account the amount of wear and tear the item has. There are different rulings as to whether or not this would include obsolescence, or the loss of usefulness as a result of outdated construction designs.

Having an understanding as to what type of replacement agreement you have with your insurance company will help you to better understand the way replacement costs are calculated in the event of a theft or damage due to fire or other disaster.

At Connell Insurance Agency, we understand how important it is to protect yourself and your rental in the event of theft due to a break-in or even a dishonest tenant, as well as destruction of your property due to a disaster. Call us today at 888.590.0715 to learn more about our NJ Landlord Property Insurance.