{
  "slug": "replacement-cost-vs-acv",
  "title": "Replacement Cost vs. Actual Cash Value Calculator",
  "heading": "Replacement Cost vs. ACV Calculator",
  "category": "financial",
  "url": "https://www.revenuelab.fyi/toolbox/replacement-cost-vs-acv",
  "summary": "See the real dollar difference between an ACV payout and a replacement cost payout.",
  "description": "Homeowners and renters policies settle claims one of two ways: actual cash value (ACV), which pays replacement cost minus depreciation for the item's age and condition, or replacement cost value (RCV), which pays the full cost to buy a new equivalent item regardless of age, sometimes requiring you to actually replace it first and submit receipts for the depreciation holdback. The gap between these two numbers can be substantial for older roofs, appliances, and electronics. This calculator takes an item's replacement cost new, its age, and an expected useful life to compute straight-line depreciation, then shows both the ACV payout and RCV payout side by side along with the depreciation holdback you'd recover only under an RCV policy after replacing the item.",
  "formula": "Depreciation = replacement cost × (age ÷ useful life), capped at 100%; ACV payout = replacement cost − depreciation; RCV payout = replacement cost (minus deductible); holdback = RCV payout − ACV payout.",
  "dateModified": "2026-09-30",
  "run_url": "https://www.revenuelab.fyi/api/public/calc?tool=replacement-cost-vs-acv",
  "inputs": [
    {
      "id": "replacementCost",
      "label": "Cost to replace with new equivalent",
      "kind": "number",
      "hint": null,
      "default": 12000,
      "unit": "$",
      "min": 0,
      "max": null
    },
    {
      "id": "itemAge",
      "label": "Age of item",
      "kind": "number",
      "hint": null,
      "default": 12,
      "unit": "years",
      "min": 0,
      "max": null
    },
    {
      "id": "usefulLife",
      "label": "Expected useful life",
      "kind": "number",
      "hint": null,
      "default": 20,
      "unit": "years",
      "min": 1,
      "max": null
    },
    {
      "id": "deductible",
      "label": "Policy deductible",
      "kind": "number",
      "hint": null,
      "default": 1000,
      "unit": "$",
      "min": 0,
      "max": null
    }
  ],
  "outputs": [
    {
      "id": "holdback",
      "label": "Depreciation holdback (RCV advantage)",
      "format": "currency",
      "hint": null,
      "primary": true
    },
    {
      "id": "acvPayout",
      "label": "ACV payout",
      "format": "currency",
      "hint": null,
      "primary": false
    },
    {
      "id": "rcvPayout",
      "label": "RCV payout",
      "format": "currency",
      "hint": null,
      "primary": false
    },
    {
      "id": "depreciationPct",
      "label": "Depreciation applied",
      "format": "percent",
      "hint": null,
      "primary": false
    }
  ],
  "worked_example": {
    "inputs": [
      "Cost to replace with new equivalent: 12000 $",
      "Age of item: 12 years",
      "Expected useful life: 20 years",
      "Policy deductible: 1000 $"
    ],
    "outputs": [
      "Depreciation holdback (RCV advantage): $7,200",
      "ACV payout: $3,800",
      "RCV payout: $11,000",
      "Depreciation applied: 60%"
    ]
  },
  "how_to": {
    "title": "How to use this",
    "steps": [
      "Enter cost to replace with new equivalent ($).",
      "Enter age of item (years).",
      "Enter expected useful life (years).",
      "Enter policy deductible ($).",
      "Read your depreciation holdback (rcv advantage) on the right — it updates as you type.",
      "Hit Share to keep the scenario or send it to someone."
    ]
  },
  "scenarios": [
    {
      "name": "Conservative",
      "description": "Lower-end numbers — what if things land soft?",
      "values": {
        "replacementCost": 7200,
        "itemAge": 7,
        "usefulLife": 12,
        "deductible": 600
      }
    },
    {
      "name": "Typical",
      "description": "Defaults — the most common real-world setup.",
      "values": {
        "replacementCost": 12000,
        "itemAge": 12,
        "usefulLife": 20,
        "deductible": 1000
      }
    },
    {
      "name": "Ambitious",
      "description": "Higher-end numbers — what if things really pop?",
      "values": {
        "replacementCost": 19200,
        "itemAge": 19,
        "usefulLife": 32,
        "deductible": 1600
      }
    }
  ],
  "limitations": [
    "Results are estimates before tax, fees, and inflation unless an input explicitly covers them.",
    "Rates are treated as fixed for the whole period — variable-rate products will drift from this projection.",
    "This is educational maths, not financial advice. Check anything contractual with the lender or your accountant."
  ],
  "faq": [
    {
      "q": "Why would anyone choose an ACV policy over RCV?",
      "a": "ACV policies cost less in premium because the insurer pays out less on every claim. Some situations — investment/rental property, older homes, or roofs in hail-prone areas — are only insurable at ACV terms in the first place, since insurers restrict RCV roof coverage where claims frequency is high."
    },
    {
      "q": "How do I actually collect the RCV holdback amount?",
      "a": "Most RCV policies pay the ACV amount first, then require you to complete the actual repair or replacement and submit receipts within a set window — commonly 180 days to 2 years — before releasing the withheld depreciation. If you never replace the item, you keep only the ACV payout even though you have an RCV policy."
    },
    {
      "q": "Does this apply to roofs specifically?",
      "a": "Yes, and roofs are the most common source of ACV/RCV disputes. Many insurers now issue 'roof ACV' endorsements even on otherwise RCV homeowners policies once a roof passes a certain age (often 15-20 years), meaning a 20-year-old roof might be settled at 40-60% depreciated value even though the rest of the home is covered at replacement cost."
    },
    {
      "q": "Is the deductible applied differently under ACV vs RCV?",
      "a": "No, the deductible is subtracted the same way in both cases — it's a flat reduction from whichever payout method applies, not a percentage of depreciation. The math difference between ACV and RCV comes entirely from whether depreciation is subtracted before the deductible is applied."
    }
  ],
  "related": [
    "https://www.revenuelab.fyi/toolbox/deductible-buy-down-breakeven",
    "https://www.revenuelab.fyi/toolbox/claim-vs-pay-out-of-pocket"
  ],
  "license": "CC-BY-4.0",
  "citation": "RevenueLab — Replacement Cost vs. Actual Cash Value Calculator (https://www.revenuelab.fyi/toolbox/replacement-cost-vs-acv)"
}