Understanding Actual Cash Value Versus Recoverable Cash Value

Understanding Actual Cash Value Versus Recoverable Cash Value

If you're one of the many homeowners or business owners in Orlando, FL, who's ever filed an insurance claim, you may be familiar with the terms "actual cash value" and "recoverable cash value." These two methods of compensation can become a central feature of your insurance claim, determining how much you are able to recover based on what happened. In this blog post, we want to take the mystery out of these terms and help you understand the difference between actual cash value and recoverable cash value.

Actual Cash Value

In simple terms, Actual Cash Value (ACV) is the current market value of the damaged item at the time of the loss, minus any depreciation. Insurance companies determine this by assessing an item's age, condition, and replacement cost, and then adjust it downwards to account for any wear and tear that the item may have been subjected to. For example, if your roof is damaged and needs replacing, your insurance adjuster will evaluate the roof's age and overall condition when deciding how much to pay out for replacement. The replacement cost, minus depreciation, will be the actual cash value for that portion of your claim.

Recoverable Cash Value

Recoverable Cash Value (RCV), on the other hand, is the amount of money you get from your insurance company to pay for the repair or replacement of an item with similar quality and condition. Unlike Actual Cash Value, there is no depreciation deduction with RCV. However, most insurance companies make payouts in two parts: the ACV up front, and then the remaining RCV once the homeowner completes repairs or replacement. For example, if your roof has been damaged in a storm, the insurance company will pay for repairs based on the ACV, which is the roof's replacement cost minus its depreciation. After the roof has been repaired or replaced, the insurance company will release the remaining funds as the RCV.

Understanding The Differences And Choosing the Right Option

The key difference between ACV and RCV is how the valuation is determined, and when the payment is made. Actual Cash Value calculates the diminished value due to the item's age, condition and depreciation whereas Recoverable Cash Value calculates the cost to repair without taking depreciation into consideration. Choosing between the two options depends on several factors such as the age of the property, the extent of damage, and the individual's financial situation. For older properties, the ACV option may be more suitable, as the replacement value of older assets may be less than the cost of newer ones. Conversely, if you have newer assets, the RCV option is more suitable as you don't have to bear the depreciated costs of repairs.


Knowing the difference between Actual Cash Value and Recoverable Cash Value is crucial when filing insurance claims, as the difference in payout may be significant. As a homeowner or business owner in Orlando, FL, you should make sure you understand these concepts so that you're prepared in case you need to file a claim. And if you do, remember that a public adjuster like Ultra Property Damage can be instrumental in ensuring that you receive the compensation you need and deserve. Contact us today for a free consultation and let our experienced professionals help you with your insurance claim.

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