Insurance claims don’t all pay the same way. The type of loss settlement—ACV, RCV, or agreed loss—determines how much money you receive after a claim. Knowing the difference helps avoid surprises.
Types of Loss Settlement in Santa Ana California: ACV, RCV, and Agreed Loss Explained
When filing an insurance claim, many people assume the insurer will simply “pay to replace what was lost.” In reality, how much you receive depends on the type of loss settlement written into your policy.
Understanding the types of loss settlement in Santa Ana California—Actual Cash Value (ACV), Replacement Cost Value (RCV), and Agreed Loss—can make a big difference when it matters most.
What Is Actual Cash Value (ACV)?
Actual Cash Value pays the value of the item after depreciation due to age, wear, and use.
Simple Example
A television purchased five years ago is damaged in a loss. Even if it costs $1,000 to replace today, ACV coverage may only pay a few hundred dollars based on its current value.
ACV policies often have lower premiums, but they also result in lower claim payouts.
What Is Replacement Cost Value (RCV)?
Replacement Cost Value pays the cost to replace the item with a new, similar one, without subtracting depreciation.
Simple Example
That same television is damaged. With RCV coverage, the insurer pays what it costs today to buy a comparable new TV, as long as you replace it.
RCV coverage usually costs more than ACV, but it offers stronger financial protection.
What Is Agreed Loss (or Agreed Value)?
With agreed loss, you and the insurance company agree upfront on the value of the insured property.
If there’s a total loss, the insurer pays the agreed amount, no depreciation or replacement calculation involved.
Common Uses
- Classic or specialty vehicles
- Unique equipment
- Certain commercial property
This option provides certainty, especially for items that are hard to value.
Why Loss Settlement Type Matters
Two policies can look similar on paper but pay very differently after a claim.
In Santa Ana and Orange County, where replacement costs can be high, choosing the wrong settlement type can leave you paying out of pocket after a loss.
Understanding the types of loss settlement in Santa Ana California helps ensure your coverage matches your expectations.
Get Help Choosing the Right Coverage
Insurance language can be confusing, and many people don’t discover these differences until after a loss.
Established in 1989, Neighborhood Insurance Agency is a trusted local provider. We help individuals, families, and business owners in Santa Ana understand how policy details—like loss settlement terms—affect real-world claims.
Choosing the right coverage is the key to your peace of mind.
👉 Get a quote or talk to us today.
Santa Ana, CA 92705
Reference
Insurance Information Institute. (2026). Understanding the insurance claims payment process. Retrieved from https://www.iii.org/article/understanding-the-insurance-claims-payment-process
California Department of Insurance. (n.d.). Introduction to Commercial Insurance. Retrieved from https://www.insurance.ca.gov/01-consumers/105-type/95-guides/09-comm/upload/Commercial-Insurance-Updated-090623.pdf
