Do you have an RCV or ACV policy?
Do you have an RCV or ACV policy? The difference between these two policies can amount to several thousands of dollars out of pocket. The Replacement Cost Value (RCV) is the value of replacing your damaged items with current market rates. The insurance company will then depreciate these items based on their age and compare them based on their useful life expectancy. For example: a roof shingle that has a thirty year warranty and is ten years old will have a depreciation ratio of 10/30. The formulated depreciation amount is subtracted from the RCV to reach the Actual Cash Value (ACV). If you have a RCV policy, the depreciation that is retained by the insurance company will be issued to you after the replacement of your damaged items is complete. If you have an ACV policy the depreciation that is retained by the insurance company is non-recoverable and you will not be issued this amount. The benefit of an ACV policy is a lower monthly premium payment, which makes it attractive for rental properties and non living structures such as barns. What is your situation?.