Understanding Actual Cash Value vs Replacement Cost Value is essential for storm restoration contractors — and for helping homeowners understand why their insurance check doesn't cover the full job.
ACV is the depreciated value of the damaged property. It's what the roof was worth on the day of the storm — not what it costs to replace it today.
Formula: Replacement Cost − Depreciation = ACV
A 15-year-old roof with a 20-year lifespan that costs $12,000 to replace might have an ACV of $3,000 — because 75% of its useful life has been consumed.
RCV is the full cost to replace the damaged property with a new equivalent — without deducting for age or wear.
Formula: Full replacement cost at current prices = RCV
If you have RCV coverage and complete the roof replacement, the insurance company releases the withheld depreciation (the difference between ACV and RCV) as a second payment.
Insurance companies always pay ACV first. They hold back the depreciation until the work is completed and documented. This holdback — called "recoverable depreciation" — is released as a second check after the job is done.
The problem: many homeowners don't understand this. They think the ACV check is all they're getting. They spend it on other things. Then when the job is done and you try to collect the balance, there's no money — and you're stuck chasing a payment that may never come.
During the contingency signing meeting, explain the two-payment structure clearly. CompanySync includes an AI-generated video explanation (via HeyGen) that you can text to every new contingency customer.
CompanySync separates ACV and RCV payments in your claim record. You always know which claims have received ACV, which have completed RCV releases, and which depreciation payments are still outstanding.
Set up automated reminders that go to the homeowner 30, 60, and 90 days after job completion with instructions on how to request their depreciation check from the insurer.
A well-drafted contingency agreement should specify that the homeowner assigns their right to all insurance proceeds — including recoverable depreciation — to the contractor upon completion.
ACV / RCV Payment Tracker Per Claim
| Line Item | Amount |
|---|---|
| Total Replacement Cost (RCV) | $14,200 |
| Depreciation Withheld (15-yr old roof) | − $4,800 |
| ACV Payment (First Check) | $9,400 |
| Homeowner Deductible | − $1,500 |
| Net First Check to Contractor | $7,900 |
| Recoverable Depreciation (Second Check) | $4,800 |
| Total Contractor Payment (after deductible) | $13,200 |
CompanySync tracks both payments separately per claim. Start your free trial.
Start Free Trial →