Loss Settlement Provisions

Loss settlement provisions determine whether your covered loss is paid at Actual Cash Value or Replacement Cost Value, and when the depreciation holdback is released.

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Reviewed by Eli Goins, FL DFS License #P159790 · Last updated June 24, 2026

By Eli Goins · FL DFS #P159790 · Reviewed: June 24, 2026 · 1 min read

Short answer: Loss settlement provisions decide whether your covered loss is paid at Actual Cash Value, the depreciated value at the time of loss, or Replacement Cost Value, the cost to repair or replace with new. RCV starts with an ACV payment and holds back depreciation until you submit repair receipts proving the actual cost incurred.

ACV provisions

Pays depreciated value at time of loss
No holdback (full payment upfront)
Lower recovery on aged property
Common on older policies, policy reductions

RCV provisions

Pays cost to repair or replace with new
Initial payment is ACV
RCV holdback withheld
Released on submission of repair receipts

Ocean Point Claims:coverage triggers and thresholds

Conditions for RCV

Time to rebuild

Typically 180 days to 24 months
Varies by policy
Extensions available

Like-for-like replacement

Similar quality and functionality
Matching statute applies
Code-upgrade coverage separate

Receipt submission

Actual cost incurred
Not estimated
Contractor invoices required

Common RCV disputes

Holdback never released
Carrier disputes repair completeness
Timeline exceeded
Code-upgrade cost classification

Ocean Point Claims:anti concurrent causation clauses

Valued policy (Florida)

Fla. Stat. 627.702
Total-loss on fire/lightning: full policy amount
Can't reduce below policy limit on total loss
Statutory obligation

Frequently asked questions

What is the difference between ACV and RCV loss settlement?

ACV pays the depreciated value of your property at the time of loss, with no holdback, so you get full payment upfront but a lower recovery on aged property. RCV instead pays the cost to repair or replace with new. The initial RCV payment equals ACV, and the remaining depreciation is held back until you complete the repairs.

How do I get the RCV holdback released?

The carrier withholds the depreciation holdback until you submit proof of the actual cost incurred. That means contractor invoices and repair receipts, not estimates. Once you document that the work was done and paid for, the held-back amount is released.

How long do I have to rebuild and still recover the holdback?

The time to rebuild is typically 180 days to 24 months, though it varies by policy, and extensions are often available. The replacement must be like-for-like, meaning similar quality and functionality. Code-upgrade coverage is handled separately from the basic loss settlement.

Does Florida guarantee a full payout on a total loss?

Florida's valued policy statute, Fla. Stat. 627.702, requires the carrier to pay the full policy amount on a total loss from fire or lightning. The insurer cannot reduce the payment below the policy limit on a total loss. This is a statutory obligation, not a negotiable position.