ACV vs RCV in Arizona: What Your Settlement Check Actually Means

If you filed an Arizona insurance claim and got a settlement check that’s less than your contractor’s repair estimate, you’re probably looking at an ACV payment with depreciation withheld. The acronyms — ACV and RCV — show up everywhere on Arizona property claims, and most homeowners don’t realize the first check isn’t the full payment until they try to hire a contractor with it.

ACV (Actual Cash Value): The First Check

Actual Cash Value is what your damaged property was worth at the time it was damaged — the depreciated value, not the replacement cost. For a 15-year-old asphalt shingle roof, the ACV value is dramatically lower than the cost to install a new one. The carrier calculates depreciation based on the age and condition of the property and subtracts that from the replacement cost to arrive at the ACV figure.

Example: A complete roof replacement in Mesa costs $18,000. Your roof is 15 years old. The carrier estimates depreciation at $11,000. They send you an ACV check of $7,000 (the $18,000 replacement cost minus $11,000 depreciation, minus your deductible).

The $7,000 ACV check is your initial settlement. It’s not the full settlement.

RCV (Replacement Cost Value): The Final Number

Replacement Cost Value is what it actually costs to replace the damaged property with new materials of like kind and quality. RCV is the full repair number — labor, materials, permits, code upgrades, and disposal.

In the Mesa roof example, the RCV is $18,000. That’s the full cost to do the work properly.

If your policy includes Replacement Cost Coverage (most modern Arizona homeowner policies do), the carrier owes the full RCV — they just split the payment in two pieces.

Recoverable Depreciation: The Second Check

The difference between ACV and RCV is called depreciation. On a Replacement Cost policy, depreciation is recoverable — meaning the carrier will release the held-back amount after you complete the work and submit invoices.

In the Mesa roof example: $7,000 ACV check is the first payment. The remaining $11,000 of recoverable depreciation gets released after the roof is completed, the contractor’s invoices are submitted to the carrier, and the carrier verifies the work matches the scope.

This is why your first check feels too small. It is. The full settlement is the ACV plus the recoverable depreciation. You only get the depreciation released when you actually do the work.

When ACV Is All You Get

Some policies — and some specific coverages within policies — only pay ACV, with no recoverable depreciation:

• Cosmetic damage endorsements on roofs (some policies exclude cosmetic-only roof damage from RCV coverage)
• Roof age exclusions on older roofs (some carriers limit roofs over 15-20 years to ACV only)
• Personal property (some policies pay personal property at ACV unless you have RCV personal property coverage)
• Wind/hail surcharges on certain roofs (some endorsements convert wind/hail roof damage to ACV-only)

Read your declarations page. If you see “ACV only” language tied to your roof, the held-back depreciation isn’t recoverable. The first check is the only check.

How Carriers Manipulate Depreciation

This is where most underpayment hides. Depreciation is supposed to reflect actual physical wear and aging. In practice, carriers often apply depreciation aggressively to maximize the gap between ACV and RCV — knowing that some homeowners won’t complete the work and won’t recover the full settlement.

Patterns we see:

• Inflating depreciation rates beyond reasonable wear estimates
• Applying depreciation to non-depreciable items (labor, permits, sales tax — these aren’t supposed to be depreciated, but adjusters routinely include them)
• Using “effective age” instead of actual age to bump older items into a higher depreciation bracket
• Claiming “pre-existing damage” to shift damage from the current loss event to prior wear

If your ACV check looks small relative to a $20K+ replacement cost, ask for the depreciation calculation in writing. Look at every line. Labor depreciation in particular is often improper.

How to Recover Held-Back Depreciation

1. Complete the repair work using a licensed Arizona contractor
2. Get final invoices itemized to match the carrier’s scope (or larger, if scope was supplemented)
3. Submit invoices to the carrier with a written request to release recoverable depreciation
4. The carrier reviews and issues the second check, usually within 30-60 days
5. If the actual cost exceeded the RCV estimate, submit a supplemental claim for the additional cost

The deadline to recover depreciation is policy-specific but typically 6-24 months from the date of loss. Don’t wait.

When a Public Adjuster Helps with ACV/RCV Disputes

A public adjuster makes sense when:

• The depreciation calculation looks excessive
• The carrier won’t release recoverable depreciation despite completed work
• The work cost more than the RCV estimate and you need to file a supplemental
• You’re not sure whether your policy is RCV or ACV-only

Arizona public adjusters are licensed and contingency-based. No upfront cost. We work the depreciation calculation as part of any claim review.

Request a free claim review to find out whether your settlement reflects the full RCV your policy provides.