Understanding the Difference Between an ACV Policy and an RCV Policy: What Georgia Homeowners Must Know About

Champion Roofing
Aug 18
3 min read

Introduction

Ever filed a roofing claim and felt blindsided by what your insurance actually paid out? You’re not alone. The secret sauce in your policy isn’t just the coverage amount—it’s whether you’ve got an ACV (Actual Cash Value) or RCV (Replacement Cost Value) policy. These three little letters can mean thousands of dollars’ difference when it’s time for a new roof. Let’s unravel the jargon, clear up the confusion, and help you make the best call for your home and wallet.

ACV Policy vs RCV Policy: The Basics

Actual Cash Value (ACV) Policy

Pays you the value of your roof minus depreciation.
Think of it like selling your used car—insurance only pays what your roof is worth today, not what it cost brand new.
Out-of-pocket costs can be significant, especially for older roofs.

Replacement Cost Value (RCV) Policy

Pays to replace your roof with a brand-new, similar one—no depreciation deducted.
You get the full cost to restore your home to its pre-loss condition, minus your deductible.
Higher premiums, but often less financial pain when disaster strikes.

How Do Insurers Calculate Payouts?

Let’s say a hailstorm damages your 15-year-old roof. Here’s how each policy type would handle it:

ACV Policy Example

Replacement cost of new roof: $12,000
Depreciation (age/wear): $7,000
Deductible: $1,000
Insurance payout: $12,000 - $7,000 (depreciation) - $1,000 (deductible) = $4,000

Ouch! That’s a big chunk you’ll have to cover yourself.

RCV Policy Example

Replacement cost of new roof: $12,000
Deductible: $1,000
Insurance payout: $12,000 - $1,000 = $11,000

Much better, right? You only pay your deductible, and the insurance covers the rest.

Why Do Insurers Offer Both?

ACV policies have lower premiums, appealing if you’re looking to save money up front.
RCV policies offer better protection, especially for big-ticket items like roofs, but cost more each month.

ACV Policy vs RCV Policy: Pros and Cons

ACV Policy

Pros:

Lower premiums
Good for homes with newer roofs (for now)

Cons:

Larger out-of-pocket costs after a claim
Depreciation can make payouts surprisingly small
Not ideal for older roofs or high-value property

RCV Policy

Pros:

Smaller out-of-pocket surprise
Pays for a full replacement, not just the depreciated value
Peace of mind for big storms and old roofs

Cons:

Higher premiums
Some insurers require proof that repairs were completed before paying the “recoverable depreciation”

What’s “Recoverable Depreciation”?

If you have RCV, insurance companies often pay the ACV amount first. Then, after you show proof the work is done, they pay the rest (the “recoverable depreciation”).

Pro tip: Save all invoices and receipts—otherwise, you might miss out on that second check!

Bullet Points: Key Differences Between ACV and RCV

ACV: Payout = replacement cost minus depreciation and deductible
RCV: Payout = full replacement cost minus deductible (after work is done)
ACV means more out-of-pocket for older roofs
RCV means higher premiums, but better coverage when you need it

How to Choose: ACV Policy vs RCV Policy?

How old is your roof?

Older roofs lose value fast under ACV policies.
How much can you afford out-of-pocket?

If you don’t have a cash cushion, RCV might be safer.
What’s your premium budget?

RCV costs more, but could save you thousands later.
What does your mortgage lender require?

Some lenders require RCV for full protection.

ACV Policy vs RCV Policy in Georgia: Local Insights

Georgia’s wild weather (hail, wind, hurricanes) means roof claims are common.
Many insurance companies are tightening RCV requirements—some only offer ACV on older roofs.
Roofs over 10-15 years old may only qualify for ACV coverage, even if you want RCV.

FAQs: Understanding ACV Policy vs RCV Policy

Will my policy automatically upgrade from ACV to RCV if I get a new roof?

Not always. You’ll need to contact your insurer and possibly pay a higher premium.

Can I switch from ACV to RCV mid-policy?

Usually, yes—if your roof qualifies and you’re willing to pay the increased premium.

Why did my insurance only pay part of my claim?

If you have an ACV policy, depreciation was deducted. If you have RCV, you may need to submit final invoices for the rest.

Is RCV always better?

For big-ticket repairs like roofs, RCV offers more protection, but it depends on your budget and risk tolerance.

Do all insurance companies offer both ACV and RCV?

Not always, especially on older roofs. Ask your agent what’s available for your property.

Conclusion

Understanding the difference between an ACV policy and an RCV policy isn’t just insurance jargon—it’s a crucial part of protecting your home, your savings, and your peace of mind. Before the next Georgia storm rolls in, review your policy, ask questions, and make sure you’re covered the way you want to be. A little homework now can save a world of headaches later.