Actual Cash Value (ACV) vs. Replacement Cost (RCV)
Getting paid used second-hand market value vs. the cost to buy brand new replacements.
Actual Cash Value (ACV) factors in depreciation, meaning a 10-year-old roof or 5-year-old electronics will pay out only a fraction of what you need to replace them. In contrast, Replacement Cost pays for brand-new equivalents without deduction for wear and tear. Estimate your dwelling rebuild capital using our Home Replacement-Cost Estimator, read our guide on What is ACV vs Replacement Cost in a Claim?, and review our property deep-dive in Home Insurance Fundamentals.
| Key Dimension | Actual Cash Value (ACV) | Replacement Cost Value (RCV) |
|---|---|---|
| Depreciation Treatment | Subtracted heavily based on age and wear | Zero depreciation subtracted |
| Why It Matters: Determines whether you must self-fund thousands of dollars in replacement gaps. | ||
| Premium Cost | 10% to 20% cheaper monthly premium | Slightly higher premium for complete peace of mind |
| Why It Matters: The modest extra premium is almost always worth the massive claim payout difference. | ||
Use our open-source actuarial calculators to simulate deductibles, out-of-pocket exposure, and multi-policy trade-offs.
Frequently Asked Questions: Actual Cash Value (ACV) vs. Replacement Cost (RCV)
Direct answers to trade-offs, actuarial differences, and decision criteria.