ACV vs RCV: how insurers put numbers on your stuff
Two acronyms control what your contents claim actually pays. Understanding them takes five minutes and changes how you build your inventory.
The two numbers
Replacement cost value (RCV) is what it costs to buy a comparable item new, today. Your six-year-old sofa's RCV is the price of an equivalent new sofa — say $2,600.
Actual cash value (ACV) is RCV minus depreciation for age and wear. If sofas are assumed to last ~15 years and yours was 6 years old, an adjuster might depreciate 40%: ACV ≈ $1,560.
How depreciation is calculated
The common method is straight-line: depreciation = age ÷ expected useful life, applied to replacement cost. Useful-life assumptions vary by category — electronics are depreciated fast (often ~5 years), wood furniture slowly (~15 years), and some categories (fine art, jewelry) barely at all. Condition matters too: "like new" justifies less depreciation than "worn." These are judgment calls, which is why your inventory should state each item's age and condition — leaving them blank invites the least favorable assumption.
Which one does your policy pay?
- ACV-only policies pay the depreciated amount, period. Cheaper premiums, smaller claim checks.
- Replacement cost policies (most common for homeowners contents) typically pay in two stages: first the ACV, then the withheld depreciation — called recoverable depreciation — after you actually replace items and submit receipts, usually within a policy time limit.
That two-stage flow surprises people: the first check looks small, and the rest only arrives if you replace the items and file the paperwork. Two practical consequences: keep every replacement receipt, and calendar your policy's deadline for claiming recoverable depreciation.
Why this changes how you build your list
- Ages matter. An honest, stated age lets depreciation be calculated fairly instead of assumed harshly.
- Completeness beats haggling. Ten forgotten drawer-items at $40 each is $400 of RCV that no negotiation will ever recover — because unlisted items pay zero.
- Replacement prices should be current retail for like kind and quality — not what you paid years ago, not thrift value.
- Depreciation isn't unlimited. Adjusters commonly cap it well short of 100% for items still in service — an old-but-working item isn't worthless.
A worked example
| Item | Age | Useful life | RCV | Depreciation | ACV (first check) |
|---|---|---|---|---|---|
| 65" TV | 3 yrs | 5 yrs | $1,180 | $708 (60%) | $472 |
| Leather sofa | 6 yrs | 15 yrs | $2,600 | $1,040 (40%) | $1,560 |
| Stand mixer | 8 yrs | 10 yrs | $449 | $315 (70%*) | $134 |
Recount does this math for you
Every item in a Recount inventory carries its RCV, useful life, depreciation, and ACV — transparently calculated, capped sensibly, and editable by you. You see exactly what the adjuster will be looking at, before they do.
See how it works