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Wren Insurance Agency Blog

All You Ever Wanted to Know About Insurance

ACV vs. RC??


Homeowner’s insurance is one of the most important financial obligations to get right. Having the wrong amount of coverage, whether that be too much or too little, can be financially, physically, and ultimately emotionally detrimental. This is why we want to make finding the right amount and kind of homeowner’s insurance as painless and simple as possible – so let us be the experts!

One of the most common questions we get from our clients about their homeowner’s insurance is what is the difference between Replacement Cost (RC), and Actual Cash Value (ACV), when it comes to their particular needs and subsequent insurance options. This is why we thought it might be helpful for us to go over each of these options briefly, and help you learn more about which option is right for you!

Replacement Cost (RC) is the type of coverage that will put you in the best position to fully replace your assets that are negatively impacted, or even destroyed, by an event covered in your homeowner’s insurance policy. This is what we always want our clients to have, as it is the coverage that allows them to recover back to their original state of living before they were ever impacted or filed a claim. This often requires an appraiser to come and estimate what RC would be appropriate to match your home’s specific value.

Actual Cash Value (ACV), on the other hand, is the type of coverage that will repay you whatever the original value of your home was but with depreciation. This means that rather than receiving a payout that can help you fully replace your damaged and/or destroyed items and assets, ACV only pays you a certain percentage of what the items were originally worth. This requires you to ultimately pay more out of your personal pocket to fully recover from whatever peril you faced.

These two types of homeowner’s insurance coverage are very different, and they can have a major impact on you and your loved one’s ability to recover following a potential disaster. This is why ensuring that you have the right amount of homeowner’s insurance is crucial – you deserve the right protection for your largest asset. 


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