Mountain Valley Roofing Blog

Homeowner's Insurance Policy ACV or RCV?

We're 3 days into April and as the saying goes "April showers bring...roof leaks?"

As spring storm season begins, it's important to know what type of homeowner's insurance coverage you have.                      

When it comes to homeowner's insurance, there are two primary types of coverage for assessing the value of damage: Replacement Cost Value (RCV) and Actual Cash Value (ACV). Let’s break down the differences:

1. Actual Cash Value (ACV):

2. Replacement Cost Value (RCV):

In summary:

  • ACV pays based on depreciated value, while RCV pays to replace items/building materials with new ones.
  • While it may seem like a good idea to go with the cheaper ACV policy, this is only beneficial if you will have the cash on hand to cover the out-of-pocket depreciation costs on large claims, such as roof replacements.

If you're unsure which type of coverage you have, reach out to your insurance agent and request a copy of your policy documents.