RCV vs. ACV Explained
Plain-language explanation of replacement cost value and actual cash value, and why both matter in a contents claim.
Two numbers drive most contents disputes: Replacement Cost Value (RCV) and Actual Cash Value (ACV).
Replacement Cost Value (RCV)
RCV is the amount it would cost to replace a damaged or destroyed item with a new, similar item of like kind and quality at today’s prices. For personal property, that usually means researching current retail prices for comparable goods — not what the item cost years ago.
Actual Cash Value (ACV)
ACV is generally RCV minus depreciation. Depreciation reflects the age, condition, wear, and remaining useful life of the item. Policies and courts may define ACV differently by state (replacement cost less depreciation, fair market value, or broad evidence).
Why Both Matter
Most homeowners policies initially pay ACV, then pay recoverable depreciation (the difference between RCV and ACV) once the insured actually replaces the item and provides proof of replacement. A clear RCV/ACV breakdown for each line item helps policyholders, adjusters, and appraisal panels understand what is owed and when.
How Digitory Values Items
We research current retail prices for comparable replacements, apply reasonable depreciation when the valuation method requires it, and document the source and basis for each value so the report can be defended in negotiation or appraisal.