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RCV vs ACV: What They Mean on a Contents Claim

Replacement cost value is what the item costs to buy today. Actual cash value is that figure less depreciation for its age and class — subject to the policy and the jurisdiction.

Kevin Godfrey, KevinLast updated 3 October 2026

What is the difference between RCV and ACV on personal property?

RCV is the current cost to replace the item; ACV is RCV minus the depreciation that applies to its age and class.

The distinction matters because the two numbers answer different questions. RCV asks what the market charges for this item now. ACV asks what the item was worth in the state it was in on the day of the loss. One is research; the other is arithmetic performed on the research.

The simplest possible example

One item, no tax, round numbers
FigureAmountWhere it comes from
Replacement cost (RCV)$1,000What the item costs to buy today
Depreciation$300Age against the useful life for its class — 30% here
Actual cash value (ACV)$700RCV less depreciation

How a real line foots

A worksheet line carries quantity and tax, and the order they apply in changes the answer. Kevin applies tax per line and depreciates the tax-inclusive figure:

The money chain, left to right
StepCalculation
Extended costUnit cost × quantity
Sales taxExtended cost × the rate for the loss address
RCV + taxExtended cost + sales tax
$ Depr.(RCV + tax) × depreciation percentage
ACV(RCV + tax) − $ Depr.

Why the price needs a source

Depreciation is a percentage of the replacement cost, so an unsupported RCV produces an unsupported ACV. Every priced line in Kevin keeps the listing behind its unit cost, and the figure is the price of one real listing rather than a blend — which means a questioned ACV can be traced back through the arithmetic to a URL.

Why age and class decide the gap

The same $1,000 of replacement cost depreciates very differently depending on where the item sits in the schedule. A three-year-old item in a 20-year furniture class has lost 15% of its life; the same age in a three-year clothing class has lost all of it. Kevin's schedule carries 31 categories and 87 sub-lines for exactly this reason, and depreciation runs to 100% rather than stopping at an invented floor.

Recoverable depreciation

Many policies pay ACV at settlement and release the withheld depreciation once the insured actually replaces the property and documents it. That is a policy term, not a universal rule: some policies and some jurisdictions treat it differently, and the withheld amount may be time-limited. Read the policy; the schedule tells you the arithmetic, not the entitlement.

Kevin produces a defensible valuation schedule and the evidence under it. It does not make coverage determinations, and nothing here is a statement about what a particular policy pays.

Common questions

What is the difference between RCV and ACV?
Replacement cost value is what it costs to buy the item again today. Actual cash value is that figure less applicable depreciation for the item’s age and class. RCV is a market fact; ACV is RCV after arithmetic the policy defines.
Which one does a claim pay?
That depends on the policy. Many contents policies pay ACV first and release the remaining depreciation once the property is actually replaced — recoverable depreciation. Others settle at ACV only. The policy and the jurisdiction decide, not the inventory software.
Where does sales tax sit?
Per line, and inside the figures. Kevin applies tax to the extended cost of each line, which produces RCV plus tax, and depreciation is then applied to that tax-inclusive number. So ACV already has tax inside it rather than tax being added afterwards.
Why does the replacement price need a source?
Because every number downstream is derived from it. If the replacement cost is unsupported, the depreciation and the ACV built on top of it are unsupported too — the arithmetic is only as defensible as its first input.
Can ACV be zero?
Yes. Property past the useful life for its class depreciates fully, and the line shows $0.00. There is no salvage floor in Kevin’s schedule — 86 of its 87 lines carry no cap at all.
Does Kevin decide what my claim is worth?
No. It produces a priced, classified, depreciated schedule with the evidence attached, and an adjuster reviews and edits every line. Coverage determinations are not a software output.

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