What is ACV vs RCV in Insurance?

Insurance providers usually estimate the value of a totaled car based on its actual cash value (ACV)—but that might not get you the best payout.
Written by Kaitlin May
Reviewed by Kathleen Flear
Most insurance providers base the reimbursement of your totaled vehicle on its Actual Cash Value (ACV), but there’s potential for a higher payout with Replacement Cost Value (RCV) insurance, which is why it’s important to know what your options are depending on your provider.
You may love your car as much as the day you drove it off the lot, but the hard truth is that its value decreased by at least 11% the moment it was purchased. In the event of an accident or maintenance blunder, the amount you’ll take home with you will depend on whether or not you have RCV insurance—and not all plans are created equally.
Luckily, the
car insurance
coverage comparison gurus of
have rounded up all the details you need to know about ACV, RCV, and how you can ensure a sufficient payout if you total your vehicle.
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What is ACV in car insurance?

No matter when you purchased your car, its value began to drop the moment you signed the paperwork. The amount it’s worth now is called the actual cash value (ACV)
Even if you paid the big bucks for a high-quality vehicle at the time of purchase, the amount of mileage you’ve accumulated, any signs of damage, and its age all contribute to its depreciated value over time. 
Despite having high hopes for a payout that reflects your original investment when it needs to be replaced, most insurance providers will offer you a payout that aligns with its current value.
If you’re financing your car along with 82% of car owners, your car’s ACV could leave you owing more in payments than your car is worth, which is an even harder pill to swallow. 
Key Takeaway: Your car’s age, mileage, and wear-and-tear will be factored into its ACV.

How do you calculate ACV?

You may consult verified sources to find out what your ACV will be, but your insurance company will have its own process to ultimately determine your ACV based on their internal data.
This is the most common method used by insurance companies across the board to offer you coverage when you need to replace your car. If you bought a brand spankin’ new car in the last five years, you won’t be covered for its purchase price—you’ll only receive a payment that reflects the subtracted depreciated value from its original cost.
To calculate this, providers will cross analyze information in their database containing costs of vehicles that they insure with a similar make and model to yours. They may also consult the costs of similar vehicles in your area and factor in the value based on your location. 
Since this can be a sensitive process, some insurance companies will bring in a third party to assess their findings and ensure you’re getting the most out of your car’s ACV potential.

What is RCV insurance?

Although ACV reimbursement is widely accessible, some insurance companies offer replacement cost value (RCV) insurance, which gives you a full return on your original investment.
That means the depreciation isn’t a factor when it comes to your personal property. Time, damage, or other factors that deplete the worth of your belongings won’t impact your payout with RCV. However, it can be a costlier option on a monthly basis, and harder to access when it comes to coverage options.

ACV vs RCV in car insurance

ACV is typically built into your insurance plan, and while RCV insurance may seem like a money-saving savior at a glance, its elusiveness in car insurance companies makes it a bit more complicated. 
Not every provider offers RCV as an option—and those who do put stringent prerequisites in place before you can access it. Your car has to fall into the threshold of what your insurance company considers to be “new,” and you’ll also need to accompany RCV coverage with
collision insurance
If your car doesn’t meet the requirements for RCV coverage from your provider, ACV may be the only option when your car is deemed totaled. 
Despite the monetary limitations of an ACV settlement, there is a way you and your insurance company can meet in the middle:
gap insurance
. This can bridge the gap (literally) between you and a financial bind by covering the difference between an ACV reimbursement and the sum of your remaining car loan payments.
On the other hand, upgrading to RCV coverage will result in about a 10% uptick in your insurance premium. That might still be worth it depending on the type of vehicle you own, as well as some other factors.
Pro Tip: Review your policy’s declaration page to gather information on their options for coverage and value amounts to get a better idea of what your options are. 

Do you need RCV car coverage?

Cars aren’t just personal property: they can hold sentimental value that outweighs any dollar amount. If that’s the case for you, you should probably consider RCV insurance coverage.
If your provider offers RCV insurance, it’s a good idea to get it if:
  • Your car was purchased new within the last five years
  • You have the funds to pay up to 10% more per month on car insurance
  • You wouldn’t be satisfied with a lower settlement in the event of an accident
  • You finally bought your dream car and can’t imagine owning a car of lesser value
  • You purchased the car as a gift and want it to be fully covered and cost protected
Key Takeaway: Whether or not you need RCV coverage is a decision based on your personal preferences.

How to get the best insurance for your car

Navigating decisions between ACV and RCV reimbursement options can be a whole lot easier with the guidance from the car insurance comparison and broker app
The team of licensed brokers backing Jerry read the fine print for you, and cross-analyze 50+ premier insurance carrier plans before presenting you with the ones customized to your needs. You won’t need to fill out any paperwork, scour any insurance company sites, or waste precious time waiting to speak to a live agent.
All you need to do is spend 45 seconds signing up for the
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They’ll even help you switch plans or cancel your current plan before your policy renews each time, which has helped save Jerry users an average of $887 per year.
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Insurance providers will determine the payout for your damaged car based on its purchase price when you bought it. 
If the most updated installment of your car’s model happens to cost more because of its novelty, the manufacturer’s suggested retail price (MSRP) may not match the exact dollar amount you originally paid, but you’ll walk away with a much more substantial settlement than you would at ACV.
It’s best not to wait until your car is totaled to find out whether or not your replacement options will come at actual cost value or replacement cost value. ACV is the most prevalent form of reimbursement offered by insurance companies, in which they retain the depreciation. 
RCV is less frequently available, but the depreciation will be issued to you after your car is replaced. The fastest way to get information on your coverage options is by signing up for the car insurance super app
in less than 45 seconds.
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