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A Look at the Difference Between Replacement Cost, Actual Cash Value, and Stated Value

A Look at the Difference Between Replacement Cost, Actual Cash Value, and Stated Value


As every homeowner knows, the insurance process can be extremely difficult to navigate, and that difficulty increases when you have a mobile home. If you have recently purchased mobile home insurance or manufactured home insurance, or if you are looking to purchase a policy in the future, you are probably wondering what happens during the claims process. How exactly does your insurance provider determine how much they will pay you in the event of a loss?

While the answer will differ depending on your individual circumstances, there are a number of different methods that most insurance providers will use to decide how much a policyholder is owed for a loss involving a mobile, modular, or manufactured home. Continue reading for a look at three of the most common methods used to determine reimbursement for losses.

Replacement Cost

If your home has been stolen or damaged to the point where it is no longer usable, the replacement cost is considered to be the cost of replacing it with a similar or identical new model. It’s important to keep in mind that replacement cost does not take the wear and tear associated with ownership into account. If your manufactured home has been affected by prolonged exposure to the elements, for example, that will not be detracted from your reimbursement, and you will still be owed a new home. For most mobile or manufactured homeowners, replacement cost is the best possible insurance policy option because it provides the most protection against loss of your home. If you are able to find an affordable policy, this type of mobile home insurance will provide you with the best value.

Actual Cash Value

The actual cash value—often referred to as market value—of your home simply means how much you might reasonably expect to get for your home if you were to sell it in its current condition. There is a formula that can be used to determine your home’s actual cash value—you simply take the total replacement cost and subtract any depreciation. Depreciation is an insurance concept that is generally determined by taking the expected lifespan of an item and estimating how much longer you might expect to use it. For example, a mobile home that has an estimated lifespan of 30 years would have lost 50 percent of its value after 15 years, while a new mobile home may have lost little or none of its value. However, natural wear and tear and other factors may also be taken into account. In order to determine the actual cash value of your home, your manufactured home insurance provider may send an adjuster to examine your home in person.

Stated Value

Here’s a dilemma that a lot of homeowners run into: your property is valued so high that you are unable—or unwilling—to pay for a modular home insurance policy that is based on its replacement cost? There is a solution—you can purchase a policy that is based on its stated value. This means that the insurance provider assigns your item a value that is less than its real value, which usually allows you to have a lower premium. In the event of a loss, the manufactured home insurance provider will generally reimburse you based on whichever value is lower: the actual cash value or the stated value of your home. If you have recently purchased a new home, basing the insurance policy you purchase on its stated value may turn out to be a good financial option for you. However, since it does not cover your home’s entire value, it’s also not always the best fit. While it can make mobile home insurance more affordable, stated value insurance may also not serve to fully protect your interests in all cases.

If you’re the owner of a Park Model Home, modular home, manufactured home, or mobile home, one of the challenges you may have faced is finding an insurance policy that is suited to your needs. National Mobile Home Insurance Company is here to provide the versatile manufactured home insurance options you’re looking for. We understand what your needs are, and we’re here to make the insurance process work for you.

Call 1-800-388-6780 for any and all of your questions.


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National Mobile Home Insurance is an Arizona domiciled insurance agency (License #: 3000102138) offering personal lines insurance products to owners of mobile and manufactured homes in AL, AZ, AR, CA, CO, CT, DE, GA, ID, IN, IA, KS, KY, LA, ME, MD, MI, MN, MS, MO, MT, NE, NV, NJ, NM, NC, ND, OH, OK, OR, PA, RI, SC, SD, TN, TX, UT, VT, WA, WV, WI, & WY. National Mobile Home Insurance is a trade name of NMHIC Corp. In the State of California (License #: 6001537) we operate as an insurance agency under the trade name NMH Insurance Agency. In MO, MT, PA, & UT we operate as an insurance agency under the trade name National Mobile Home Insurance Agency.

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