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What’s the Difference Between a RCV and an ACV Policy?

Homeowners insurance

Having reliable homeowners insurance is important, especially for Central Florida homeowners whose roofs are vulnerable to the threat of annual hurricanes, intense heat, and torrential downpours. However, when choosing homeowners insurance, you’ll probably be asked if you’d like a replacement cost value or an actual cost value policy. While the differences may seem small, they can add up in the long run.

Here are the differences between the two policies and which is better for Central Florida homeowners who want the best roof coverage to protect them from large out-of-pocket costs for roof damage claims.

What Is an RCV Policy?

Replacement cost value (RCV) policies guarantee homeowners are reimbursed for the full amount to replace a damaged roof with a similar “like” and quality. RCV policies have higher premiums, but they also ensure homeowners receive damages that have modern-day equivalents instead of adjusted amounts from past years.

What Is an ACV Policy?

Actual cost value (ACV) policies provide the amount that the lost or damaged item was worth instead of what it’s currently worth. Depreciation is considered to subtract a certain amount from its value. Under ACV policies, homeowners would only be covered for the cost of a new roof minus the amount of wear and tear it endured.

RCV Policy vs. ACV Policy: Which Is Better for Homeowners?

While ACV policies may be cheaper, RCV policies provide a better payout for homeowners. Insurance companies will be able to make their formula for calculating depreciation, and it could end up that homeowners will have to pay much higher out-of-pocket costs for roof repair under an ACV policy. RCV policies provide more peace of mind to homeowners in case something major happens to their roof.

It’s important to know what type of policy you have and check on it every few years to ensure it stays the same. Some insurance companies will switch RCV coverage to ACV after 10 years as the roof ages and becomes more vulnerable. To counter this, schedule regular roof maintenance and inspections to keep your roof up-to-date and covered for what it’s worth.

Rely on Central Florida’s Roofing Experts

With 35 years of experience in the roofing industry, RBS Construction & Roofing is a locally- and family-owned and operated roofing business in Orlando, Florida. Our team of veteran craftsmen provides superior residential and commercial roof installations, inspections, and repairs in the Central Florida area. If you need high-quality and affordable roofing services, call the professionals at RBS Roofing at (689) 304-9605 to schedule an inspection today.