ACV and RCV are two different types of coverage that affect how much compensation a homeowner will receive for damaged or destroyed property.
ACV stands for “actual cash value,” which takes into account the replacement cost of the damaged property, less any depreciation. This means that the insurance company will provide compensation based on the value of the damaged property at the time of the loss, taking into account factors such as age and wear and tear.
On the other hand, RCV stands for “replacement cost value,” which is the amount it would cost to replace the damaged property with new items of similar kind and quality, without accounting for depreciation. This means that the insurance company will provide compensation based on the full cost of replacing the damaged property with new items.
So, if a homeowner has ACV coverage, they will receive compensation for the value of their damaged property after depreciation has been taken into account. If they have RCV coverage, they will receive compensation for the full cost of replacing their damaged property with new items of similar kind and quality.
It is important for homeowners to understand the difference between ACV and RCV when choosing their insurance coverage and when filing a claim. RCV coverage typically has higher premiums, but it may provide better coverage and higher compensation in the event of a loss.
