Actual Cash Value vs.Recoverable Cash Value: What’s the Difference?
Let’s face it – fully understanding your insurance coverage can be an overwhelming task, especially when it comes to the language used in your contract. If you have to file an insurance claim and it’s denied, it can be difficult to know if you were denied in bad faith because of the volume of unfamiliar words and phrases.
Actual cash value (ACV) policies versus recoverable cash value (RCV) policies are just a few of these terms. However, knowing exactly what they mean and the type of policy you should choose is difficult for many people to understand.
The bad faith insurance lawyers at Millin and Millin know better than anyone the confusion that situations like these can cause. We hope to give you a basic understanding of these terms, but always remember that we’re available to talk to if you need more details!
What To Know About ACV and RCV
The main difference between actual cash value and recoverable cash value policies is whether or not depreciation is covered by the policy. It’s key to understanding the differences between the two, particularly when you file a large loss claim.
- • Actual Cash Value – Put simply, actual cash value is the replacement cost subtracted by the depreciation of the property or item. This means that the insurance company will not cover depreciation, and you may have to pay for some of the replacement costs yourself.
- • Recoverable Cash Value – On the other hand, you can opt for a policy that takes that depreciation into account when you file a claim. You will often need to provide receipts, invoices, and other documents to prove the depreciation, which also means these types of claims can take longer to process.
What does this mean for the policyholder? Basically, ACV policies are cheaper than RCV policies due to the fact that they do not cover the depreciation. However, they’ll also pay out sooner but at a lower total.
What a Bad Faith Insurance Lawyer Can Do for You!
In addition to explaining these concepts in greater detail, a bad faith insurance lawyer can play a huge role if you feel that you have been a victim of bad faith. The frustration and stress of a denied insurance claim on top of complex language is something we know all too well.
A bad faith insurance lawyer will review your policy as well as the decision made by the insurance company. They will walk you through the process and make sure that you feel understood and heard.
If the insurance company denied the claim in bad faith, failed to pay out the correct amount, or delayed payments, then you definitely need the help of a bad faith insurance lawyer. The delayed payments could be even more of a problem if you opt for an RCV as they can take longer to pay out.
Don’t Worry – Millin and Millin Can Help!
For many people, it’s difficult to realize when you may need the help of bad faith insurance lawyers, especially when the terms and language of the policy are overly complex. Millin and Millin can be there for you and answer any questions you may have if you believe your insurance claim was denied in bad faith.