Replacement cost vs. actual cash value.
In plain English
This single phrase in a policy decides whether a claim makes you whole. Replacement cost value (RCV) pays what it costs to buy the item new today, often by reimbursing the depreciation after you actually replace it. Actual cash value (ACV) pays replacement cost minus depreciation: the used-market worth of your six-year-old things. ACV policies have cheaper premiums for the obvious reason. The same split appears in homeowners (roofs especially), renters, and auto coverage.
01Why it matters
People discover this distinction during a claim, which is the most expensive possible time. The premium difference between ACV and RCV is usually small; the payout difference on a real loss is not.
02The math, step by step
A 6-year-old TV bought for $1,200; a new equivalent costs $900 today. RCV pays $900 (minus deductible). ACV might pay $300 after depreciation. Multiply that gap across an apartment of belongings and the cheaper policy costs thousands at claim time.
03What this is NOT
"Full coverage" is not a defined term and doesn't tell you which valuation you have. The declarations page does. Reading that one line before renewing is the whole assignment.
04Receipts
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Plain-English answers from our glossary. Receipts included. Never advice.
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