6.2.6 Compensation

From: Financial Consumer Agency of Canada

How your insurer will compensate you following an insured loss is described in your policy. There are two levels of compensation you can buy insurance for:

  • Actual cash value means that the property will be replaced with something of like kind and quality, minus depreciation (an amount deducted for wear and age). For example, if your five-year-old television is stolen, you will be compensated for the value of the used television, not for the value of a new model. Unless your policy states otherwise, compensation is based on actual cash value.
  • Replacement cost means you will be compensated for the value of the object without depreciation. In this case, you would get the value of a new television. Replacement coverage usually costs more than actual cash value coverage.


  • Depreciation: The reduction in the value of property through use, aging and deterioration

Know what you own

Make a complete list of your possessions and their value, and update it once a year. Your insurance company can provide you with a record-keeping form, or you can create a room-by-room record by photograph, video or audio tape. Be sure to include makes, models and serial numbers, and keep receipts for major items. Store your inventory in a safety deposit box or another secure location away from your home. You can download a record-keeping form from the Insurance Bureau of Canada website by clicking on the Home Inventory link.

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