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RCV (replacement cost value) and ACV (actual cash value) coverage refer to how your insurance company will assess value and pay to replace or repair damaged items following a covered claim.
Actual cash value vs. replacement cost value. The biggest difference between actual cash value and replacement cost value is how much you are paid for your damaged items after a covered claim.
Replacement cost value coverage is a bit simpler to understand than actual cash value for roofs. If you have a homeowners policy that covers your roof on a replacement cost basis, the insurance ...
For example, the building may be insured at replacement cost value, most of the contents insured at actual cash value and a few specific items at a fixed value (antiques). Policies may also include co-insurance clause or deductibles provisions which will impact the actual cash paid out by the insurance company. [2]
Replacement cost is the actual cost to replace an item or structure at its pre-loss condition. This may not be the "market value" of the item, and is typically distinguished from the "actual cash value" payment which includes a deduction for depreciation.
Replacement cost coverage pays the cost of repairing or replacing the property with like kind & quality regardless of depreciation or appreciation. Premiums for this type of coverage are based on replacement cost values, and not based on actual cash value. [5] Actual cash value coverage provides for replacement cost minus depreciation. [6]