Glossary term
On a replacement-cost policy the carrier usually pays actual cash value first and withholds the rest. That withheld amount — the recoverable depreciation — is the second check, and it is the one that goes unclaimed when nothing in the file is tracking it.
Definition
Replacement cost value (RCV) is what it costs to repair or replace the damaged property with materials of like kind and quality at current prices, with no deduction for age or wear. Actual cash value (ACV) is that same figure minus depreciation. On a replacement-cost policy the carrier typically issues the ACV amount first and releases the difference — the recoverable depreciation, also called the holdback — after the repairs are completed and documented. On an actual-cash-value policy there is no second check: the depreciated number is the whole recovery.
Related
The definition is the easy part. These pages cover what the term does to a file once there is money and a deadline attached to it.
The applied version: how to read and rebut a depreciation schedule.
Open pageThe narrower entry on ACV and how it is calculated.
Open pageThe narrower entry on RCV and what it should include.
Open pageRCV, ACV, depreciation, and O&P pulled from every estimate PDF automatically.
Open pageFAQ
No. Policies distinguish recoverable from non-recoverable depreciation, and the recoverable portion is normally conditioned on completing the repairs and submitting proof within a stated window. Items the policy schedules at actual cash value — some roofs, awnings, and contents categories — never generate a second check regardless of what is repaired.
It is heavily contested and the answer varies by state, by policy language, and in several jurisdictions by case law. It is worth checking on every file, because depreciated labor on a large scope moves the ACV figure substantially and is often applied by default in carrier estimates.
Read it line by line against the age and condition of what was actually there. The recurring problems are an assumed useful life that is too short, depreciation applied to items with no meaningful wear, and a percentage carried across a whole category rather than assessed per item.
No. It explains how the terms function in claim work. The controlling answer for any specific file is in that policy and that state's law, and coverage questions with real money attached deserve a licensed opinion.
Next step
Thirty minutes, live in the product. Bring a file where this term is doing real damage and we will work it on the call.
