Replacement Cost Value – RCV – This is the value to completely replace your damaged property with something new.

Actual Cost Value – ACV – This is the value of the damaged property or the value of the damage to your home before you make repairs.

Depreciation – DEPREC. – This is the difference between the RCV and the ACV. The value of the depreciation is determined differently by each insurance company. Most are simply percentage based. This dollar amount is also called the “Recoverable Depreciation.”

Deductible – This is the amount that your policy states that you will pay out of your own pocket towards the damages.

You are going to hear a lot of terms during the renovation process and some you may have never heard before. These terms are important to understanding how insurance companies pay for your property damages. The following is a typical example and how payments are made by your insurance company.

TOTAL CLAIM or REPLACEMENT COST VALUE = $1000

DEPRECIATION or RECOVERABLE DEPRECIATION= $200

ACTUAL CASH VALUE = $800

DEDUCTIBLE =$100

The first check from the insurance company will be for the ACV of the damage minus your deductible.

RCV ($1000) – DEPREC. ($200)= ACV (800)

ACV ($800) – DEDUCTIBLE ($100) = First Check ($700)

In order to be paid for the depreciation or recoverable depreciation, your insurance company will require that the repairs be completed and that Garner Johnson provide your carrier with a copy of our contract, invoice, or certificate of completion.