Do you know the difference between ACV and RCV? Most people don’t so let’s talk about it!
Actual cash value or ACV is replacement cost value minus depreciation. For example if you buy a couch for $2,000 and make a claim on it five years in the future, the couch may now be worth $1,000 because of age and depreciation. In that case your insurance carrier would only pay out $1,000 and not the full amount required to replace the couch. Your options are to replace that $5,000 couch with a more basic $1,000 version, or to cover the difference out of your own pocket.
Replacement cost value or RCV is the full cost to repair or replace damaged property without a deduction for depreciation. We always recommend RCV to our clients to mitigate the losses felt after an incident. Note that with most policies in order to be paid the replacement cost you must be insured within 80% of the cost.
Do you know what your policy covers? Reach out to us today, we can check your policy for you! Call us at 512-759-0558 or email us your policy to take a look at [email protected].