The depreciation math, in words
Replacement cost (RCV) pays what it costs to replace the damaged thing with a new equivalent, today. Actual cash value (ACV) starts from the same number and subtracts depreciation for age, wear, and use. The older and more worn the thing, the wider the gap between the two checks.
Picture a roof halfway through its expected life. At RCV, a covered loss replaces it and your cost is the deductible. At ACV, the carrier's math starts by calling half the roof "used up" — and that half, plus the deductible, is yours. Same storm, same shingles, very different renewal-day surprise if nobody flagged which basis your policy uses.
| Where it shows up | Typical basis | Watch for |
|---|---|---|
| Dwelling (Coverage A) | RCV on standard HO-3s | Insure to full rebuild cost or claims can be penalized |
| Roof | Increasingly ACV on older roofs | Roof payment schedules by age — common as roofs pass the 20-year mark |
| Contents (Coverage C) | ACV by default on many forms | The RCV contents endorsement is cheap and worth it |
| Scheduled items | Agreed value | No depreciation argument at all — that's the point |
The roof is where cheap quotes hide their cheapness
California carriers have responded to years of losses by writing roofs on older homes at ACV, or on explicit age-based payment schedules. Two quotes for the same house can differ mostly because one settles the roof over 20 years old at ACV and the other doesn't — a difference worth far more than the premium gap between them. It's one of the first things we check when comparing carriers, and a documented re-roof (permits, receipts) is one of the highest-payoff moves at quote time. How carriers see each roof type →
How RCV claims actually pay
Carriers commonly settle in two steps: the ACV amount first, then the recoverable depreciation after you complete the repair or replacement and submit the invoice. Budget cash flow for that gap, keep every receipt, and don't sit on the deadline your settlement letter gives you for the second payment. The claim process →
Contents: the endorsement that changes your worst week
Picture re-buying a burgled living room at garage-sale prices — that's ACV contents. The replacement-cost contents endorsement re-prices the same claim at what things cost new, and it's typically one of the cheapest meaningful upgrades on the policy. Pair it with an accurate home inventory (a ten-minute video walkthrough, stored off-site) and the named-perils contents coverage starts working the way people assume it does. For items with real value — jewelry, art, instruments — go one step further and schedule them at agreed value.
Compare the fine print
We read the roof schedules so you don't find them in a claim.
Four minutes to a live HO-3 indication — then an independent broker compares carriers on settlement language, not just price.
Get a pricing indication →What to check on your dec page tonight
Three lines. One: does Coverage A reflect today's rebuild cost — and is extended replacement cost stacked above it? Two: is there a roof payment schedule or ACV roof endorsement anywhere in the forms list? Three: do the contents settle at replacement cost? If you can't tell in five minutes, send us the dec page — reading them is free and we do it all day. How to read the rest of it →
Frequently asked
Is ACV ever the right choice?
Sometimes — on a rental's roof, or where the premium savings genuinely matter and you can absorb depreciation. It's a fine tool when chosen deliberately. The problem is discovering it accidentally, mid-claim.
Who decides how much depreciation applies?
The adjuster, using the carrier's schedules for the item's age and condition. Documentation pushes back: receipts, photos, maintenance records. It's a negotiation with evidence, and your broker can help you make it one.
Does RCV mean I'm covered for code upgrades too?
No — rebuilding to current code is a separate coverage called ordinance or law, and it matters enormously on older California homes. Older homes guide →