The amount of home insurance coverage you need depends on your personal needs. Plans can be customized to meet the need of the homeowner. One factor to consider when determining the amount of insurance needed is understanding how value is calculated. Two main ways that insurers determine value are with actual cash value (ACV) and the replacement cost. ACV considers depreciation. If an old item is lost or stolen, its value at the time of the incident is what counts, not the original purchase price. When you file a claim for such items, you will likely be reimbursed with an ACV or half of the replacement cost. A plan that goes by replacement value will cover the amount it takes to replace the item without consideration for the current state of the item.
One way to customize your insurance plan is by choosing to add extended coverage. It's up to you to decide as to how much you want to extend the coverage. You have the option of choosing an extended replacement plan that could boost reimbursement by as much as 25%. This add-on guarantees a higher replacement cost for your insurance payout.