Is your situation covered?
| Scenario | Typical verdict | Why |
|---|---|---|
| HO-3 with RCV on dwelling and contents | Usually covered | Pays new-for-old on both structure and belongings up to limits. |
| HO-3 with RCV dwelling, ACV contents | Depends on wording | Common budget config — contents payout can be 40–70% of new. |
| DP-1 landlord policy (ACV only) | Depends on wording | All settlements are ACV — big gap on older roofs and systems. |
| Roof over 15 years old | Depends on wording | Many carriers force ACV settlement on old roofs regardless of policy form. |
| Total loss with extended replacement cost | Usually covered | Extended RCV pays 25–50% over dwelling limit — huge protection. |
General industry patterns. Your actual cover lives in your policy wording — PolicyPal reads it for you.
The short answer
Replacement Cost Value (RCV) pays what it costs today to replace a damaged item with a similar new one. Actual Cash Value (ACV) pays RCV minus depreciation for age and wear. On a 20-year-old asphalt shingle roof, ACV settlements are often 30–40% of RCV. Choosing wrong at policy shopping quietly costs tens of thousands at claim time.
How depreciation gets calculated
Insurers use age-life tables — a shingle roof depreciates 5% per year, HVAC 3.5%, carpet 10%. Adjusters apply this to the RCV estimate to reach ACV, then hold back the depreciation until you actually complete the repair and submit receipts. That holdback recovery is a common pain point.
- Age-life tables set depreciation rates
- Depreciation held back until repair complete
- Receipts required to release the holdback
- Cosmetic vs. functional depreciation battles
What PolicyPal checks
We identify whether your policy pays RCV or ACV separately for dwelling, other structures, and contents. We flag roof settlement schedules that force ACV after a certain age, wind/hail cosmetic exclusions, and whether extended or guaranteed replacement cost is included. We also compare your dwelling limit to modern construction cost — most US homes are underinsured by 20%+.
Extended and guaranteed replacement cost
Extended RCV pays 25–50% over your dwelling limit when rebuild costs spike (labor shortage, materials inflation, code upgrades). Guaranteed RCV is unlimited — rare and expensive. Post-2020 construction inflation makes at least Extended RCV nearly mandatory in most US markets.
- Extended RCV: 25–50% cushion over Coverage A
- Guaranteed RCV: unlimited rebuild
- Inflation guard: automatic annual bump
- Ordinance/law: separate — needed to meet current code
Contents settlement negotiation
For contents ACV settlements, itemize with age and original cost. Many adjusters accept 'like kind and quality' pricing from current retailers, effectively RCV. Depreciation on electronics is aggressive (20%/year); depreciation on furniture is milder (5–10%/year) — push back with published tables.
Frequently asked
- Is RCV always worth the extra premium?
- Almost always — the annual cost delta ($100–$300) is dwarfed by a single roof or contents claim.
- What's recoverable depreciation?
- The gap between ACV and RCV that you get paid after completing repairs and submitting invoices.
- Do all carriers ACV old roofs?
- Most in FL, TX, CO, OK. Endorsements to keep RCV on old roofs exist and are worth requesting.
- How is ACV calculated for a total loss?
- Rebuild cost minus age-based depreciation of the structure. Older homes lose 40–70% of RCV on ACV settlement.
- Does business personal property use the same rules?
- Yes — commercial property forms offer ACV or RCV election. RCV is standard on BOPs.
- Can I switch to RCV mid-term?
- Yes, mid-term endorsements typically apply after the change date — pre-existing damage stays at the old basis.
Your policy is the only source of truth
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