What is RCV?

This is a great question to ask before deciding on the insurance that you are going to purchase. Whether you are needing car insurance, home insurance or commercial insurance, Replacement Cost Value (RCV) is critical in the settlement phase as this plays a very large roll in the amount that will be offered from the insurance companies.

So why is RCV so important? Simply put it’s the difference between replacing your insured items with new versus used. With RCV the insurance carrier will indemnify the policy holder with the amount of money necessary to replace the insured items at the new price. Without RCV or Replacement Cost Value, the items would be paid out at what it would cost if were to be bought on Ebay or at an Estate Sale.

The settlement dollar amount offered in most cases in a loss is significantly greater, as a result the premium for RCV is greater than ACV or Actual Cash Value. However the premium difference isn’t so much more where it is unaffordable in comparison to an ACV policy. Therefore RCV is typically more desirable when insuring anything if it is offered and affordable to the potential policy holder.

Be sure to check out the article on “What is ACV”.

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