Actual Cash Value vs Replacement Cost Calculator
Compare what your insurance pays under Actual Cash Value (ACV) versus Replacement Cost Value (RCV) policies. ACV deducts depreciation from the replacement cost, while RCV pays the full cost to replace the item new.
Cost to buy the same or equivalent item brand new today.
Expected lifespan of the item (e.g. roof: 20 yrs, appliance: 10 yrs).
How old the item is at the time of the loss.
Amount you pay out-of-pocket before insurance pays.
Straight-line depreciates evenly each year; declining balance front-loads depreciation.
Estimated value at end of useful life (often $0 for most personal property).
Formulas Used
Straight-Line Depreciation (ACV):
Annual Depreciation = (Replacement Cost − Salvage Value) ÷ Useful Life
Accumulated Depr. = Annual Depreciation × Age
ACV = Replacement Cost − Accumulated Depreciation
(floored at Salvage Value)
Double Declining Balance Depreciation (ACV):
Rate = 2 ÷ Useful Life
Each Year: Depreciation = Book Value × Rate
Book Value = max(Book Value − Depreciation, Salvage Value)
ACV = Book Value after Age years
Payout Calculations:
ACV Payout = max(ACV − Deductible, 0) RCV Payout = max(Replacement Cost − Deductible, 0) Gap = RCV Payout − ACV Payout
Assumptions & References
- ACV Definition: Actual Cash Value = Replacement Cost − Depreciation. This is the standard industry definition per ISO and most state insurance codes.
- RCV Definition: Replacement Cost Value pays the cost to replace the damaged item with a new one of like kind and quality, without deducting depreciation.
- Straight-Line Method: Assumes equal depreciation each year over the item's useful life. Most commonly used for insurance ACV calculations.
- Double Declining Balance: An accelerated method that applies twice the straight-line rate to the remaining book value each year. Useful for electronics and vehicles.
- Salvage Value: For most personal property (furniture, appliances), salvage value is $0. For vehicles or commercial equipment it may be non-zero.
- Deductible: Applied after ACV or RCV is determined; payout cannot go below $0.
- Useful Life Guidelines (IRS Publication 946 / industry standards): Roof: 20–30 yrs; HVAC: 15–20 yrs; Appliances: 10–15 yrs; Electronics: 3–5 yrs; Furniture: 7–10 yrs; Vehicles: 5–10 yrs.
- This calculator is for educational purposes. Actual claim settlements depend on your specific policy language, state regulations, and insurer adjustments.
- References: ISO (Insurance Services Office) ACV guidelines; NAIC Consumer Insurance Guide; IRS Publication 946 (depreciation methods).