# What is ACV vs RCV on an insurance claim? Actual cash value is replacement cost less depreciation. Replacement cost value pays what a new equivalent costs, usually in two instalments > Source: https://servpronorhfremont.com/questions/total-loss-and-depreciation/what-is-acv-vs-rcv-on-an-insurance-claim/ > Last reviewed: 2026-08-22 --- - Home - All questions - Total loss and depreciation - What is ACV vs RCV on an insurance claim? # What is ACV vs RCV on an insurance claim? This applies across all four perils: water, fire and smoke, mold, and biohazard. Safe for homeowners Within the conditions described on this page. Actual cash value pays replacement cost minus depreciation — what the item was worth used, at the moment it was destroyed. Replacement cost value pays what an equivalent new item costs, but usually in two payments: the depreciated amount first, and the withheld depreciation released only after you have actually replaced the item and shown proof. ACV Cost − depreciation RCV Cost of new RCV paid in 2 parts ## The short version - ACV is depreciated value. RCV is what a new equivalent costs. - RCV is normally paid in two parts, with the depreciation held back until you replace the item. - That holdback catches people out: the first cheque is not the settlement. - Your declarations page states which basis applies, and it can differ between dwelling and contents. ## The two numbers, on one item # Link to this section Take a five-year-old sofa that cost $2,000 and would cost $2,400 to replace today. - ACV pays roughly what it was worth used at the moment it was destroyed — after depreciation for five years of life, perhaps a few hundred dollars. - RCV pays the $2,400, but typically in two instalments: the ACV amount now, and the difference once you have bought a replacement and sent the receipt. Across a whole house of contents that gap is frequently the largest single number in the claim. ## Why the holdback exists, and what it costs you # Link to this section The depreciation holdback exists to stop a policy from paying new-for-old on items nobody intends to replace. That is a defensible design. Its practical effect on a homeowner is that you often have to spend the money before you are reimbursed for it , at exactly the point in your life when spending money is hardest. Two things follow. First, find out the deadline for submitting replacement proof — there is one, and it runs from the date of loss or the date of settlement rather than from whenever the rebuild finishes. Second, keep the receipts organized as you go, because reconstructing them later is how the holdback gets abandoned. ## What this means for your claim The recoverable depreciation holdback is the part that surprises people. On an RCV policy the first payment is the ACV amount. The rest — the depreciation — is released only when you have replaced the item and submitted proof. If you never replace it, you never receive it. That has a practical consequence: on a large contents claim you may need to spend money before you are reimbursed for it. Ask what the deadline is to claim the holdback, because policies impose one, and it is easy to lose several months arguing about scope and then find the window has closed. Check which basis applies to which coverage. It is common for the dwelling to be RCV while contents are ACV, which is a meaningful gap on a fire claim where the contents inventory is most of the loss. This depends on your state Insurance regulation, assignment-of-benefits rules, mold and biohazard requirements, and licensing are all set by state. This page reflects state department of insurance guidance as of 2026-08-22. Verify with your state department of insurance before you rely on it. ## Common mistakes - Treating the first cheque as the final settlement. On an RCV policy it is usually the depreciated portion only. - Not replacing items, and so never recovering the withheld depreciation. - Missing the deadline to submit replacement proof. - Assuming contents are covered on the same basis as the dwelling. They frequently are not. ## Common follow-up questions ### Which one do I have? Your declarations page states the valuation basis, and it can differ between dwelling and contents. If the page says nothing, ask the carrier in writing rather than assuming. ### Can I get the depreciation without replacing the item? Generally no. Recoverable depreciation is released on proof of replacement. That is the whole mechanism, and it is why an RCV policy does not behave like a single lump-sum payment. ## Related questions - The first hour after any loss - What your policy actually covers - What to photograph and log ## Sources Every source cited on this page - T1 Policy Terms and Coverage — FEMA / NFIP (accessed 2026-08-22) - T1 State insurance departments (directory) — NAIC (accessed 2026-08-22) Written by: PLACEHOLDER — Claims Reviewer Reviewed by: PLACEHOLDER — Claims Reviewer Last reviewed: 2026-08-22 This page is general information, not insurance, legal or medical advice. Your policy governs your claim. Nothing here assesses your specific loss.