Replacement cost pays to replace damaged property with new equivalents; actual cash value pays the depreciated amount. Replacement cost costs a little more but pays far more at claim time.
By the Home & Dime Editorial Team · Updated 2026
Actual cash value (ACV)
Replacement cost minus depreciation — you get the item’s used value.
Replacement cost value (RCV)
Pays to buy new, with no depreciation deducted.
Frequently asked questions
Which should I choose?
Replacement cost — the higher payout is usually worth the small premium difference.
Which is cheaper?
ACV premiums are lower, but payouts are much smaller.
Related guides
Sources: Insurance Information Institute (iii.org); Consumer Financial Protection Bureau; FEMA; state Departments of Insurance. General information, not insurance advice.
Part of our Homeowners Insurance guide
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