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Michigan Farm Bureau Family of Companies


What are actual cash value (ACV) and replacement cost (RC)?  

These are terms you may encounter during the claims process that are used throughout the insurance industry. They have very specific, standardized meanings to help provide clarification for everyone in the process of adjusting a claim.

  • Actual Cash Value (ACV) is the value of an item at the time of the loss. It includes any depreciation for age, wear and tear from use, physical deterioration, market conditions and all forms of obsolescence. Your insurance policy is designed to pay for damaged property at its Actual Cash Value.
  • Replacement Cost (RC) is an optional coverage that you may have purchased with your policy for an additional premium. Replacement cost will pay the difference between the Actual Cash Value and the amount you actually spend to replace damaged property with like kind and quality.
  • If you have the Replacement Cost Endorsement, we will first pay you for the ACV of the property after it has been evaluated. Then, after you have replaced the items and submitted receipts to us, we will reimburse you for the difference.