Actual Cash Value vs. Replacement Cost Value

What's the Difference?

Actual Cash Value (ACV)

The amount of money needed to fix your home, minus the decrease in value of your property because of age or use. This is also called Depreciated Cash Value.

Replacement Cost Value (RCV)

The amount of money needed to repair your home at today's prices of building supplies; or replace your belongings at today's cost of the similar or like item. It is important to discuss replacement cost with your insurance agent when purchasing your policy.             

How Replacement Cost Works 

Generally, if you have Replacement Cost Coverage, the insurance company may first pay you the actual cash value. Once the item is repaired/replaced and receipt(s) submitted, the company will reimburse you the extra money you paid to replace/repair the item. This is called "Recoverable Depreciation." It is important to know how your policy will pay replacement cost.