Is it better to have replacement cost value (RCV) or actual cash value (ACV)?

Is it better to have replacement cost value (RCV) or actual cash value(ACV)?

RCV, as long as you can afford the difference in premium. For example, say your policy covers your roof, which was replaced in 2007. It’s 2017 and a hailstorm causes enough damage that requires replacement.

Scenario 1: You have ACV. If the average life of the roof is 20 years, you have half of the life of the roof left; the value that your carrier will give you is about half of the amount you originally paid (back in 2007), the rest will come out of pocket.

Scenario 2: You have RCV, your carrier will give you the full amount it costs to replace your roof.

Either way, be sure you know if your policy is ACV or RCV so you are not surprised in the event of a claim.

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