Actual Cash Value vs Replacement Cost: what your policy really owes you
The difference between these two terms is where a lot of money quietly disappears from claims. Here is what each one means, and how to make sure you collect everything your coverage promises.
The two values, in plain English
Replacement Cost Value (RCV) is what it costs to buy an item new today. Actual Cash Value (ACV) is that replacement cost minus depreciation for age and wear, in other words, what the item is worth used, right now.
Example. A 6-year-old sofa that costs $2,000 new might be depreciated to an ACV of about $1,000. If the carrier pays only ACV, you receive $1,000, even though replacing the sofa actually costs $2,000.
The trap: ACV paid on an RCV policy
Here is what catches most homeowners. Many carriers issue the first payment at ACV even when your policy includes replacement-cost coverage. The withheld difference has a name: recoverable depreciation. It is usually payable to you, but only after you actually replace the item and submit receipts. A large number of policyholders never go back and claim it, and the carrier keeps the difference.
See how much depreciation you can recover
ClaimFair calculates replacement cost vs ACV on every item and shows the recoverable depreciation you are owed. Reading your policy is free.
Decode my policy free →How to make sure you get replacement cost
- Confirm you have RCV coverage on your declarations page (it can differ for the structure versus contents).
- Do not treat an ACV check as final. Ask the carrier, in writing, for the depreciation schedule showing exactly what was withheld.
- Replace the items and keep every receipt.
- Submit your proof before the policy's deadline to recover the held-back depreciation.
On a large contents loss, recoverable depreciation can add up to thousands of dollars. It is one of the most common amounts left on the table.
Frequently asked questions
Is recoverable depreciation real money I can get?
Yes, if you have replacement-cost coverage. The carrier withholds depreciation up front and pays it once you replace the property and submit receipts within the deadline.
What if my policy is actual cash value only?
Then the carrier is not obligated to pay full replacement cost, but you should still make sure the depreciation applied is reasonable for the item's true age and condition, since over-depreciation is common.
General information, not legal advice. ClaimFair is a software tool and referral service, not a public adjuster or law firm. Your policy and your state's law control your specific claim.