Homeowners — Replacement Cost vs Actual Cash Value (2026)
Replacement Cost Value pays to rebuild without depreciation. Actual Cash Value pays only the depreciated value of damaged items. This 2026 tool shows the potential claim gap.
| Rebuild cost (RCV pays this) | — |
| Depreciated dwelling (ACV pays this) | — |
| Dwelling claim gap | — |
| Personal property RCV | — |
| Personal property ACV | — |
| Personal property claim gap | — |
| Total potential claim gap | — |
| Annual premium savings (ACV) | — |
Replacement Cost Value (RCV) pays to rebuild your home and replace your belongings at today's prices, no depreciation deducted. Actual Cash Value (ACV) pays RCV minus depreciation — often 40-70% of rebuild cost for older homes. The ACV gap can be tens to hundreds of thousands of dollars after a total loss.
Why ACV Gap Is So Large
Depreciation accumulates linearly in actuarial models — typically 1-2% per year for a well-maintained home. A 25-year-old home with a $350,000 rebuild cost depreciates to roughly $260,000 (about 25% deducted). Personal property depreciates faster: TVs, couches, electronics lose 10% per year. A $75,000 inventory of 8-year-old belongings pays out around $15,000-$30,000 under ACV. After a fire, that gap is what you'd pay out of pocket to rebuild and re-furnish.
Extended and Guaranteed Replacement Cost
Two upgrades beyond standard RCV exist. Extended replacement cost pays 125-150% of dwelling limit (covers rebuild cost inflation after a regional disaster when materials and labor spike). Guaranteed replacement cost pays whatever the rebuild actually costs, unlimited. Both add 5-15% to premium. Worth it in wildfire and hurricane zones where regional disasters drive 20-40% cost inflation. Also check that personal property is RCV not ACV — many policies default to ACV for contents even when dwelling is RCV.
Last updated May 2026. Sources: Insurance Information Institute, NAIC Homeowners Buyer Guide.