Replacement Cost Value (RCV) – Replacement cost is the cost to replace an item destroyed or damaged in the event of a covered loss by an insurance company.
Actual Cash Value (ACV) – depreciated value of items at the time of the insurance claims assessment.
***Another way to look at ACV is to consider the age of the damaged item. For example: If your roof is 12 years old, the ACV captures what a 12 year old roof is worth.
Depreciation – This is the difference between RCV (new market price) less the ACV (aged market price).
***This is the amount of money the insurance company holds back until work is complete. Homeowner receives ACV amount less deductible for first check and then receives depreciation amount for final check after Contractor submits work complete.