Replacement cost vs. actual cash value: the difference that matters most
Published May 21, 2026
When a claim is paid, the single biggest factor in how much you receive is whether your policy pays replacement cost or actual cash value.
Replacement cost value (RCV) pays what it costs to replace the item new today. A ten-year-old roof destroyed by a storm is paid as a new roof.
Actual cash value (ACV) pays replacement cost minus depreciation. That same ten-year-old roof is paid as a ten-year-old roof — often far less.
RCV policies cost more but pay much more at claim time. Check your declarations page to see which applies to your dwelling and your contents; they can differ.
Frequently asked questions
＋ Is replacement cost always better?
It pays more at claim time but costs more in premium. For most homeowners the larger payout is worth it, especially on the roof and structure.
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