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Coverage & Claims
Actual Cash Value (ACV) vs. Replacement Cost Value (RCV)
ACV pays a depreciated claim amount; RCV pays what it actually costs to rebuild — the difference can be tens of thousands of dollars on an older home.
Actual Cash Value (ACV) settles a claim at replacement cost minus depreciation — so a 20-year-old roof is paid out as a 20-year-old roof is worth, not what a new one costs to install. Replacement Cost Value (RCV) pays what it actually costs to repair or rebuild with materials of similar kind and quality, with no depreciation deduction.
Many insurers now write roofs specifically on an ACV (or a scheduled, age-based) basis even when the rest of the dwelling is RCV — a policy detail that's easy to miss until a claim reveals it.
Why it matters
- On an older home, an ACV roof settlement can be thousands of dollars short of what a full replacement costs, out of pocket at claim time.
- Coverage A (dwelling) should be set to the true cost to rebuild, not the home's market value — the two numbers diverge, especially for land-value-heavy markets.
- Ask specifically whether the roof is written on ACV or RCV terms; it's often disclosed only in the policy's endorsement schedule, not the summary page.
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