Why Is Actual Cash Value Bad On Texas Renters Insurance?

Actual cash value is always a raw deal. You should never, ever try to save money on Texas Renters Insurance by opting for actual cash value, because you’ll have to chip in the difference to buy a new item to replace the one that was lost. Replacement cost does exactly what it sounds like, and gives you the cost to replace the item with a new one of like kind and quality.

One of the problems with actual cash value coverage on renters insurance in Texas is that you’re at the mercy of the way depreciation is calculated based on the practices of the carrier. Farmers renters insurance policyholders in Texas and many other states sued as a class action, resulting in a settlement.

In a nutshell, the company should have calculated depreciation based on the actual condition of the property when the loss occurred. That makes sense, and ensures a fair settlement, if you consider actual cash value to be fair at all. The suit was against the Fire Insurance Exchange, which markets insurance under the Farmers brand.

What they were actually doing was using tables calculated by actuaries that assigned depreciation based on the age of the property alone. Considering that some people take better care of their property over time than others do, and that the age is in no way indicative of the actual condition of the property, that was held to be an inappropriate way to calculate how much to take off the value.

The suit also suggested that they may have applied depreciation to structural items. Generally and broadly speaking, if it’s structural it doesn’t get adjusted at the depreciated cost. If you had a Farmers renters insurance policy in Texas, you might be entitled to some money. How do you know?

• Where you insured by a Fire Insurance Exchange renters insurance policy?
• Did you have a covered loss?
• Did you tender your claim to Fire Insurance Exchange in a timely fashion?
• Did you get a payment from that claim for the actual cash value of your stuff that factored in depreciation?
• Was your claim fully and completely closed by the end of Q1 2015?
• Did you have a contents or structure claim during the period?

If you qualify, you might be able to receive 12.5 percent of the “net outstanding depreciation” amount from your claim. Find out more about the Farmers depreciation lawsuit here. The case is Alexander v. Fire Insurance Exchange, BC460992,

How do you protect yourself from improperly applied depreciation on your Texas renters insurance claim? Have a policy that covers the replacement cost of your stuff! It’s that easy. To find out more, just call (800)892-4308 or click to get covered - whether you need Texas renters insurance quotes online or coverage anywhere else!

Effective Coverage offers the nation's only completely mobile platform to quote and purchase renters insurance right from your phone or tablet in just one minute. Get an online renters insurance quote today and protect your family.

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