As your home or property ages over time, the value of the items that are installed on your home (such as roofing materials) decreases over time. This decrease in value over time is called “depreciation”.
Actual Cash Value (ACV) is the value of the damaged / aged items installed on your home or property.
Replacement Cost Value (RCV) is the actual cost of replacing those damaged items.
The insurance company will pay out the Actual Cash Value (ACV) first, and once the work is completed, they will pay the difference (depreciation) that was held back. The sum of the Actual Cash Value + Depreciation = Replacement Cost Value (RCV).