Which type of loss is compensated using Actual Cash Value (ACV) under homeowners insurance?

Actual Cash Value (ACV) is a method used to determine the value of property losses by considering the replacement cost of the item minus depreciation. Under homeowners insurance, Coverage C pertains to personal property within the home, which typically includes items like furniture, electronics, clothing, and other possessions.

When a loss occurs under Coverage C, the insurance company compensates the homeowner based on the ACV of the lost or damaged items. This means that if a person's laptop is stolen or damaged, the insurer would assess its current market value taking into account how much value it has decreased over time due to age and use.

Understanding this compensation method is crucial for homeowners to grasp how much they would receive for lost personal property, which often differs from how structural losses (like those covered under Coverage A) might be handled, potentially providing full replacement costs instead. Thus, the focus on Coverage C for Actual Cash Value encapsulates the specific application of ACV in homeowners insurance, focusing on personal belongings rather than structural elements or other aspects of homeowner coverage.