Exemptions to the Individual Mandate
There are some cases where there is no penalty to not having coverage.
In some cases, especially if you have an older home, insurance companies will only offer actual cash value coverage instead of replacement cost coverage.
Actual cash value is the amount it would take to repair or replace damage to your home after depreciation.
Depreciation is the decrease in a home or property value because of age and wear and tear.
For example: A storm destroys your roof. Your roof has a 25-year useful life and is 10 years old. The company pays based on the remaining 15 years.
NOTE: No matter the value, the amount you receive will always be reduced by the amount of your deductible.
Most insurance companies provide coverage on the contents of your home on an actual cash value basis.
You may insure your personal belongings for replacement cost, but you’ll pay a higher premium.
For example, in 2007 you purchased a couch for $700. Your couch is destroyed in 2015 and is worth only $300 because of age and wear and tear. A new couch now costs $900.
If you have an actual cash value policy, you are entitled to the current value of the couch ($300) minus your deductible.
If you have replacement cost coverage, you will be paid $300 for the couch’s current value. When you show proof of purchase of a replacement couch, you will receive the $600 minus your deductible.
Keep your receipts. Proof of purchase is required to get the full replacement cost amount.
This article is published on KansasMoney.gov. Find more information by contacting these state agencies: