Nearest broker: Searching for a broker nearby…
Nearest broker: , Edmonton, AB Phone: 780.755.0110 5020 Lac St Anne Trail N, Onoway, AB, T0E 1V0 Phone: 780.967.2282 , Edmonton, AB Phone: 825.467.5631 206 Pembina Rd, Sherwood Park, AB, T8H 0L8 Phone: 780-732-8616 10060 Jasper Ave, Edmonton, AB, T5J 3R8 Phone: 780-435-3632 , Calgary, AB Phone: 403-532-4882 322 Avenue C S, Saskatoon, SK, S7M 1N4 Phone: 639-398-4170 5317 50 Ave, Taber, AB, T1G 1V3 Phone: 403-223-2377 110a McLeod Ave, Spruce Grove, AB, T7X 2H8 Phone: 780-571-1144 496 Marquis Rd, Prince Albert, SK, S6V 8B3 Phone: 306-970-8080 335 Hwy Avenue N, Picture Butte, AB, T0K 1V0 Phone: 403-732-6023 2201 Box Springs Blvd NW, Medicine Hat, AB, T1C 0C8 Phone: 403-487-5132 550 Wt Hill Blvd S, Lethbridge, AB, T1J 4Z8 Phone: 403-394-1123 734 13 St N, Lethbridge, AB, T1H 2T1 Phone: 403-328-9114 5 St SE, High River, AB Phone: 403-652-4104 9904 103 St, Fort Saskatchewan, AB, T8L 2C9 Phone: 780-998-0881 201-4271 23 Ave NW, Edmonton, AB, T6L 5Z8 Phone: 780-466-2136 3908 97 St NW, Edmonton, AB, T6E 6N2 Phone: 780-465-6900 8170 50 St NW, Edmonton, AB, T6B 1E6 Phone: 780-469-9378 52 Ave, Drayton Valley, AB Phone: 780-621-1707 1331 Macleod Trail SE, Calgary, AB, T2G 0K3 Phone: 403-278-1050 1331 Macleod Trail SE, Calgary, AB, T2G 1E1 Phone: 403-255-2252 234-7 Westwinds Crescent NE, Calgary, AB, T3J 5H2 Phone: 403-775-2100 , Calgary, AB, T3K 0S8 Phone: 403-719-9995 5114 2 St, Boyle, AB, T0A 0M0 Phone: 780-689-3946 50 Ave, Bonnyville, AB Phone: 780-826-3147 12931 20 Ave, , AB, T0K 0E0 Phone: 403-562-2191 2903 Kingsview Blvd SE, Airdrie, AB, T4A 0C4 Phone: 403-945-8885

Which loss settlement option is best for me?

Auto Insurance

By Viola Wallace | May 9, 2018

Insurance is designed to help replace damaged stolen or destroyed property. While its purpose is pretty straightforward how that works in reality is a little more complex. The fact that you bought that limited edition ultra-high-tech camera for $10 000 does not mean your insurer will automatically hand you a $10 000 cheque if the camera is stolen or damaged. Instead the payout you will receive depends on the loss settlement option you choose . “What’s that?��? you might ask.

Put simply loss settlement refers to how insurance companies determine the amount of money you will receive after you suffer a loss to an insured item.

As with most aspects of insurance loss settlement is dependent on certain factors. Insurance companies have different methods of calculating the value of something and hence the amount to be paid out. Differences in coverage and the method of calculation used means the amount paid for the same items will vary depending on the loss settlement option you choose.

This probably raises the question in your mind: “which loss settlement option is best for me?��? To answer that question let’s first take a look at the types of settlement options available to you.

Typically loss settlement is decided in one of two ways: replacement cost or actual cash value . With these two options you could either be reimbursed for the cost to replace the lost or damaged item or for its actual cash value depending on what your policy says.

Replacement Cost (RC)

The replacement cost takes into account the cost of replacing a damaged asset at today’s cost i.e the insurance company pays you the same amount you would pay to buy that same item today. This option does not factor in depreciation which is the decrease in the value of an item due to age or wear and tear.

Replacement cost is like new for old – you have a 40 inch Sony TV that you bought 5 years ago with replacement cost you get to go and buy a new 40 inch Sony TV replacement of the same kind and quality.

Actual Cash Value (ACV)

The actual cash value (also known as the ‘Market Value’) loss settlement option is determined by the current value (worth) of your property not how much it would cost to replace it with a brand new one. This option factors in depreciation which means the insurance company would pay you the amount you would pay for a similar item at today’s cost minus depreciation.

An example would probably make it easier to understand. So let’s say that $10 000 camera we mentioned earlier was bought in 2010. You insured it at replacement cost and now it’s stolen or damaged. You check online and discover that the same camera now sells for $11 200. This is the amount you can expect to receive from your insurance payout with the replacement cost settlement option.

On the other hand if you insured it for actual cash value your payout will be less. Why? Because you’ve had the camera for eight years and due to age wear and tear it has depreciated in value by $4 000. It is no longer worth the $10 000 you paid when it was new and certainly not worth the $11 200 it now costs to replace it. Your insurer will calculate your payout by subtracting the amount of depreciation from the cost today and so your payout will be $11 200 – $4 000 = $7 200

Here’s another way of looking at it: The valuation looks at what could you buy that same 8 year old camera today (if you could find it). You could buy the exact 8 year old camera today for $7200. “What’s my 8 year old camera worth today if I were going to sell it to someone” is a good way to look at actual cash value loss settlement clause.

Get A Quote From A-WIN

Get the best insurance deals and stay on budget.

Get A Quote

Life Events - It's Time to Reassess Your Insurance

Whether it’s heading off to university or deciding to start your own business,...

Download

Rogers Insurance and CapriCMW merge to become Acera Insurance.

A-WIN Insurance is part of the Rogers Insurance Group.

Click to learn more about how this merger will impact A-WIN Insurance. Our branches will remain independently owned and operated.