The Words That Can Cost You Thousands
The difference between ACV (Actual Cash Value) and RCV (Replacement Cost Value) is one of the most important distinctions in your homeowners policy—and one of the least understood.
ACV: You Pay the Depreciation Gap
ACV pays replacement cost minus depreciation. Your 12-year-old roof costs $25,000 to replace. After depreciation, the insurer might pay $13,000. You cover the $12,000 difference.
RCV: Full Replacement, No Gap
RCV pays the full cost to replace damaged items with new ones. Same $25,000 roof—you get $25,000. No out-of-pocket gap.
Why It Matters After Fire or Hail
Fire affects your entire home simultaneously. Under ACV, a $200,000 loss might only pay $120,000 after depreciation across all depreciated systems. Under RCV, you get what it actually costs to restore your home properly.
The Cost Difference Is Small
RCV premiums are typically 10–15% higher than ACV—about $150–$225/year on an average policy. Negligible compared to a major claim shortfall.
Phase III Construction has navigated thousands of insurance claims across SE Michigan. We know how to fight for fair settlements under any policy type. Call us at (734) 237-7322 for a free inspection.