Replacement Cost Value (RCV) vs Actual Cash Value (ACV)
By Severance Calculator Editorial · Updated
RCV vs ACV — the core difference
Replacement Cost Value (RCV) pays the cost to replace damaged property with new property of like kind and quality. Actual Cash Value (ACV) pays RCV minus depreciation. On a 15-year-old asphalt roof with a 25-year useful life, ACV can be 40% lower than RCV.
State defaults
Default varies. California requires insurers to offer RCV and disclose methodology. Florida requires RCV offering with written ACV election. Texas varies by policy form (HO-A vs HO-B vs HO-C). New York Insurance Law §3445 defaults to ACV unless the insured elects RCV. Colorado defaults to RCV industry-wide post-Marshall-Fire.
See the states index for state-by-state replacement-cost statute summaries.
Should you always choose RCV?
Almost always yes for the dwelling. RCV premiums run 10-20% above ACV; the claim-time difference can run 30-70%. The exception is when a homeowner cannot afford the premium difference and is comfortable with the depreciation risk on a fully depreciated structure.
RCV on contents (Coverage C)
Standard HO-3 policies typically pay ACV on contents unless an RCV endorsement is added. HO-5 policies typically include RCV on contents. After a total loss, the ACV-vs-RCV gap on a $200,000 Coverage C limit can be $40-100k.
More on contents handling on the Coverage C explainer.
How an RCV claim gets paid
Most insurers pay ACV upfront, then release the depreciation holdback once you complete the repair or replacement and submit receipts. Some carriers offer "true RCV" with no holdback. Read your policy carefully.
Need a Coverage A baseline to size against? Use the rebuild-cost calculator and review methodology.
Related coverage explainers
- Coverage A (Dwelling)
- Coverage B (Other Structures)
- Coverage C (Personal Property)
- Coverage D (Loss of Use / ALE)
Glossary: Replacement Cost Value, Actual Cash Value, Extended Replacement Cost.
FAQ — RCV vs ACV
- What is the difference between RCV and ACV?
- Replacement Cost Value (RCV) pays the cost to replace damaged property with new property of like kind and quality. Actual Cash Value (ACV) pays RCV minus depreciation. On a 15-year-old asphalt roof with a 25-year useful life, ACV can be 40% lower than RCV.
- Which states default to RCV vs ACV?
- Default varies. California requires insurers to offer RCV and disclose methodology. Florida requires RCV offering with written ACV election. Texas varies by policy form (HO-A vs HO-B vs HO-C). New York Insurance Law §3445 defaults to ACV unless the insured elects RCV. Colorado defaults to RCV industry-wide post-Marshall-Fire.
- Should I always choose RCV?
- Almost always yes for the dwelling. RCV premiums run 10-20% above ACV; the claim-time difference can run 30-70%. The exception is when a homeowner cannot afford the premium difference and is comfortable with the depreciation risk on a fully depreciated structure.
- How does RCV apply to contents (Coverage C)?
- Standard HO-3 policies typically pay ACV on contents unless an RCV endorsement is added. HO-5 policies typically include RCV on contents. After a total loss, the ACV-vs-RCV gap on a $200,000 Coverage C limit can be $40-100k.
- How does an RCV claim get paid?
- Most insurers pay ACV upfront, then release the depreciation holdback once you complete the repair or replacement and submit receipts. Some carriers offer "true RCV" with no holdback. Read your policy carefully.