Chelsey Tucker graduated with a Bachelor of History degree from Metropolitan State University in 2019. She now writes about insurance with her specialty being life insurance and has been quoted on Help Smart Phone and MEL Magazine.

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Dan Walker graduated with a BS in Administrative Management in 2005 and has been working in his family’s insurance agency, FCI Agency, for 15 years. He is licensed as an agent to write property and casualty insurance, including home, auto, umbrella, and dwelling fire insurance. He’s also been featured on sites like

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Reviewed by Daniel Walker
Licensed Auto Insurance Agent

UPDATED: Mar 19, 2020

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Actual Cash ValueWhen it comes to homeowners insurance, there are two outcomes when your home is damaged: actual cash value paid or repair damages paid.

When you get a homeowners insurance policy it is important to understand how the outcome will be determined by your insurer.

Replacement value is another term that refers to the replacement of possessions covered under your policy. The definitions for each are explained below.

Knowing this before damage occurs will help the process go much smoother.

Read on to learn the definition of actual cash value (ACV), replacement cost, and repair cost. Also, be sure to enter your information in above to compare free insurance quotes!

Actual Cash Value

Actual cash value is a term used by the insurance industry quite often. It refers to the actual amount you could sell your home for. This is not the same as what your home could be rebuilt for.

For example, when preparing to sell your home, the amount you could sell it for is based on many things. Taken into consideration is the overall condition of the inside and outside of your home, the types of amenities you have in your home, curbside appeal, and the overall real estate market.

Once all these things are taken into consideration, a price that your home could sell for is determined. This is the actual cash value. However, you may not be able to take that amount of cash and rebuild your home if it is completely destroyed. The homeowner insurance company is interested in the actual cash value of your home. That is the amount they will pay you if your home is completely destroyed and needs to be rebuilt from the ground up.

Determining your home as a total loss is done by both a contractor and an insurance adjuster from your home insurance company. If you don’t agree with the decision and think that your home is repairable and would be of more value to you repaired, you can appeal the decision. If you agree with the total loss assessment, your insurance company will issue you a check for the actual cash value.

This is where documentation is important. Your home may be worth more than the insurance company decides upon. If you keep maintenance records, and records of any repair or upgrading you have had on the home, you can use these to prove that your home is worth more than just the standard going rate in the neighborhood. You can submit this documentation to your insurance company and see if they will adjust the amount they will pay you for actual cash value.

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Taking proper care of your home and doing maintenance when needed is important. When doing this you probably don’t think about the actual cash value of the home, but taking good care of your home will come into play. Keeping your home in good shape includes replacing leaky plumbing, damaged roof shingles, keeping siding or paint in good repair, replacing windows when needed, and making sure gutters are properly maintained. All of these things will help increase the overall cash value of your home.

Remember that many insurance companies will come back with a lower value at first. Or some companies will make it seem like you have to use their contractor or their adjuster to determine the final price. This is not the case. You can use a contractor that you trust in addition to the insurance company’s adjuster. Always make sure to research and find out for yourself what the actual cash value of your home is before accepting the insurance company’s offer. There are many websites that will help you determine the value of your home for free.

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Repair Cost

Home Repairs

If your home is determined not to be a total loss than your insurance company will pay for the repair costs to your home. They will send out their own insurance adjuster to estimate the damage, send you to one of their contractors, or you can request to use your own contractor.

This amount can also be renegotiated by you, if you don’t agree with it. Just as with actual cash value, you don’t have to be pressured by the insurance company.

Most insurance companies have their own procedures and policies for filing claims, disputing claims, and renegotiating amounts. Be sure to follow your company’s procedures so that you will not be penalized for going against policy. Keep records of all of your communication with your insurance company.

Replacement Cost

Replacement cost and actual cash value are opposites when it comes to the replacement of possessions covered by your home insurance policy. While the actual cash value of your living room furniture is going to hundreds or thousand less than your paid for it, due to use and depreciation, the replacement cost may be higher.

That is because it covers what is needed to go out and buy a comparable replacement right now. Actual cash value takes depreciation into account. Both require that you pay out your deductible before you get a dime.

Filing Claims

Being familiar with your insurance company’s policy on actual cash value and repair damages will help you when you have to file a homeowners insurance claim. To find a company with competitive rates and policies, you can use an online comparison tool. This type of tool allows you to see rates and quotes from different companies so you can find the company that works best for you. Enter your zip in below to start comparing home insurance quotes now!