What is replacement cost coverage?

What I possess I would gladly retain.


Replacement cost coverage is an endorsement (a change) to your homeowners policy. It allows you to obtain replacement cost coverage (RCC) instead of actual cost coverage (ACV) when your personal property (PP) is damaged.

Generally, homeowners policies provide for ACV coverage for your PP. That means your insurance company deducts depreciation from the value of your damaged PP. For example, you own a guitar that you bought for $500 three years ago. That guitar was destroyed in a house fire, so you make a claim with your insurance company for the guitar. Because the guitar was three years old, however, you don’t get $500 from the insurance company; they give you $100. That’s depreciation. Think of it as “wear and tear” on your PP.

If you have a RCC endorsement to your policy, that means you get RCC, not ACV, for that guitar. You’re entitled to be paid whatever amount it takes to replace that guitar. That could be $300, $500, or $750.

Here’s where it gets complicated. Most homeowners policies state that, even if you have RCC, you’re only entitled to ACV unless and until  you actually replace the item. Consider again the guitar.  The insurance pays you $100. You take that $100 and another $600 from your own money to buy a replacement. Then send the receipt to your insurance company. They should insurance pay you $500 (e.g. $600 less the $100 already paid). That’s RCC.

Know, however, that generally there are strict timelines in regard to payment of ACV and then RCC. Remember too that ACV means “fair market value.” Make sure your insurance company pays you what it should.

Questions? Contact Me for a free consultation.

Evan Walker

Evan W. Walker is a La Jolla attorney who has practiced law since 2008. He is licensed to practice in California, Connecticut, and Louisiana. His entire practice has been in litigation.

Evan is from a small town outside of New Orleans. He attended law school in New Orleans, which was interrupted by Hurricane Katrina. After evacuating to Houston, Evan graduated in 2008 as part of the ‘Hurricane Katrina Class.’

After graduation, Evan worked for a New Orleans insurance defense firm. He defended insurance companies against Hurricane Katrina lawsuits brought by homeowners and business owners.

In 2010, he and his wife moved to New Haven, Connecticut, so his wife could complete a medical residency at Yale. During the next few years, Evan worked for Travelers Insurance Company defending countless personal injury lawsuits.

In 2014, he moved to San Diego so his wife could complete a medical fellowship at UCSD. He then opened his own firm to represent people after years of defending insurance companies.

Evan is a Featured Faculty at Attorney Credits, a CLE company, and a regular contributor to various podcasts and publications. He has also been interviewed by San Diego television stations about his cases and practice.

Evan spent almost a decade as a defense attorney who defended insurance companies from personal injury and property damage lawsuits. He knows how insurance companies bully people and deny claims. And he knows how to fight them.

Bar Admissions: California Connecticut (inactive) Louisiana (inactive)

Acta Non Verba

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