Residential Property Insurance

ACV vs RCV

Policies pay different amounts to fix or replace property (your home and personal items). Usually, you have to pay part of the cost yourself. That amount is called the deductible. After that, how much money you get from the insurance company depends on if the coverages you purchased pay “replacement cost value” (RCV) or “actual cash value” (ACV).

Actual Cash Value (ACV)

ACV is the amount to replace or fix your home and personal items, minus depreciation. Depreciation is a decrease in value based on things like age, or wear and tear.

Replacement Cost Value (RCV)

RCV is the amount to replace or fix your home and personal items. 

Even if you purchased coverages that pay RCV, some types of property may only be paid at ACV. These may include:

  • Roofs
  • Other building property – appliances, wood fences, structures that are not buildings, awnings, carpeting, outdoor antennas and equipment; and
  • Personal property – antiques, collectibles, memorabilia, items that cannot be replaced, and obsolete property that is stored or not being used.

*⃣ Most companies pay you only part of the RCV first. You will have to prove that you repaired your home, or replaced or fixed personal items before you get the rest of the money.

More Terms to Know

Claim – a request made to an insurance company to pay for damage or injury.

Coverage – the damage or injuries an insurance company agrees to pay for under the policy.

Deductible – the amount you owe in a loss before the company pays its part.

First-party claim – a claim filed by you against your own insurance policy.

Policy – a contract between you and the insurance company. The policy tells you what’s covered and what the insurance company is required to pay.

Policy period  the period of time your policy provides coverage.

Third-party claim – a claim you file against another person’s insurance policy or a claim someone files against your policy.