Replacement cost value
The cost to repair or replace the covered property at current prices, subject to the policy. An RCV estimate is a valuation, not automatically the amount of your check.
Read the RCV definition →Policyholder resourcesUnderstanding Claim Payments
Understanding Claim Payments
Follow the numbers.
An estimate, a payment and the final repair cost are different figures. Learn what each number represents before comparing them.
Explore This Guide ↓Four connected concepts
Understand the value before the payment.
Actual cash value
ACV commonly subtracts depreciation from replacement cost. The valuation method depends on the policy and applicable law. A deductible or other adjustment can make the payment lower than the ACV figure.
Read the ACV definition →Recoverable depreciation
Some replacement-cost claims begin with depreciation withheld. Eligible amounts may become payable after repair or replacement requirements are met. Keep completion records and check deadlines.
Read the recoverable depreciation definition →Depreciation accounts for reduced value, commonly associated with age and condition. Ask how each deduction was calculated. Definition →
Nonrecoverable depreciation is not payable under the applicable coverage. An ACV settlement does not automatically include a later depreciation payment. Definition →
Deductibles
The deductible is your portion of the covered loss, commonly subtracted from the claim payment. Check the deductible that applies to the event, including any separate wind, hail or named-storm provision.
A percentage deductible uses the basis stated in the policy. For example, 2% of a $400,000 dwelling limit is $8,000; 5% is $20,000.
Read the deductible definition →Illustrative arithmetic · Not a settlement quote
See how one payment can differ from the estimate.
Covered replacement-cost estimate$12,000
Less depreciation− $3,000
Actual cash value$9,000
Less deductible− $2,000
Illustrative initial payment$7,000
ACV less the deductible
Only if all depreciation is recoverable and requirements are met
$12,000 covered cost less the $2,000 deductible
The deductible is counted once in this example. The later amount is conditional, not guaranteed; actual eligible repair costs and policy terms may change it.
This simplified example assumes the entire scope is covered and no other limits, adjustments or prior payments apply. It does not calculate your claim.
What may happen next
Ask what is recoverable—and what is required.
Replacement-cost coverage
Some payments initially withhold depreciation. Recovering eligible amounts may require completed repairs or replacement, supporting records and compliance with deadlines.
Actual-cash-value coverage
Do not assume depreciation is recoverable. Check the settlement provision and endorsements for the particular property involved.
A revised scope
If a contractor identifies additional work, organize the findings by estimate line and location. A higher bid alone does not explain which quantities or operations differ.
- Ask for the basis
- Which estimate and revision date support this payment? Which line items were reduced or omitted?
- Ask about conditions
- What documentation and deadlines apply to any recoverable depreciation? Request a written explanation.
- Track the total
- Keep building, belongings and living-expense payments separate, including advances and earlier checks.
- Check a percentage
- If a deductible is 2% of a stated $300,000 coverage limit, that is $6,000—not 2% of the repair bill. Verify the actual basis in your policy.
Keep exploring
Your next useful resource.
Documenting Your Loss
A photo is more useful when you can tell where it was taken, what it shows and when you noticed the change.
Explore →Prepare Before a Storm
Create a usable record of your home, keep policy information accessible and know where to find official emergency guidance.
Explore →Definitions
Look up the terms used in your policy, estimate and claim letters.
Explore →You Pay Nothing
Unless We Win.
Schedule your free consultation today.
✓No Fees Unless
We Win▣No Obligation
Case Review◎100% Focused on Maximizing
Your Recovery
We Win▣No Obligation
Case Review◎100% Focused on Maximizing
Your Recovery
▣ Schedule Your
Free Consultation☎ (405) 856-8008Corporate Mailing Address
3033 NW 178th Street, Suite B-131
Edmond, OK 73012
Free Consultation☎ (405) 856-8008Corporate Mailing Address
3033 NW 178th Street, Suite B-131
Edmond, OK 73012