ACV (Actual Cash Value) and RCV (Replacement Cost Value) are two types of insurance policies that differ in how they calculate payouts for covered losses. ACV policies factor in depreciation, meaning they pay out the current value of the damaged property, taking into account age and wear. RCV policies, on the other hand, cover the cost of replacing the damaged property with a new item of similar kind and quality, without considering depreciation. ACV policies may result in lower payouts due to depreciation, while RCV policies provide coverage for the full cost of replacement, often resulting in higher payouts but potentially with higher premiums.
