Actual Cash Value Vs. Replacement Cost

Actual Cash Value (ACV) Definition

Actual Cash Value (ACV) is defined as the cost to replace with new items of same kind and quality, less depreciation. It’s not what you originally paid for the item.

Replacement Cost Value (RCV) Definition

Replacement Cost Value (RCV) is defined as the cost to replace the lost items. It provides you with the necessary money to replace your items.

Actual cash value vs. replacement cost

The difference between actual cash value and replacement cost is a deduction for depreciation.

EINSURANCE recommends that you choose replacement cost although you might need to pay extra to get that premium service.

Replacement cost gives you the full amount back for all of your belongings that are destroyed, stolen, or damaged. It is the most cost-effective option compared with actual cash value.

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About Dale Williams

Dale Q. Williams, MBA, is a well-respected financial executive whose experience spans from insurance to investment banking. Dale has first hand underwriting experience through working for one of the largest U.S. based insurance carriers, and advisory experience from working for several bulge-bracket and middle-market investment banks. Dale also received his MBA from University of Chicago Booth School of Business, with concentrations in finance and accounting.