Different type of policy will affect the settlement amount.

Replacement Cost and Actual Cash Value

It provides you with the dollar amount needed to replace a damaged item with one of similar kind and quality without deducting for depreciation.

￭ Actual cash value policy

It pays you the amount needed to replace the item minus depreciation.

Extended and Guaranteed Replacement Cost

If your home is damaged beyond repair, it will pay to replace it up to the limits of the policy. When the value of your insurance policy has kept up with increases in local building costs, a similar dwelling can generally be rebuilt for an amount that is within the policy limits.

￭ Extended replacement cost policies:

that will pay a certain percentage over the limit to rebuild your home so that if building costs go up unexpectedly, you will have extra funds to cover the bill. These are called .

Mobile Home Policies

If you own a mobile home, besides replacement cost and actual cash value, stated amount is another option. With a stated amount policy, the maximum amount you receive is the amount you agreed to when the policy was issued, not considering depreciation. Remember to update your policy annually to make sure that the stated amount will cover the realistic cost of replacing your mobile home.