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Church Property Valuation Demystified

Updated: Feb 13

Church Property Valuation 101: ACV vs RCV

When it comes to insurance for ministries, the choice between Actual Cash Value (ACV) and Replacement Cost Value (RCV) can significantly impact coverage and financial outcomes. Therefore, it’s essential to understand the nuances between these two property coverage valuation methods. Let’s dive into the differences between ACV and RCV to help your ministry make the most informed decision when securing coverage.

What is ACV?

Actual Cash Value considers the current replacement cost of an asset minus its depreciation. In the context of ministry assets, if a church building suffers damage, the insurance payout would be based on its original cost minus the wear and tear experienced over time.

Pros of ACV:

  1. Lower Premiums but Higher Replacement Cost: ACV policies lower premiums. The downside is that your ministry will have to pay more for older items it intends to replace. For example, if you install a new roof, you might consider ACV and set aside an amount equal to the depreciation each year. That way, even if your roof doesn’t suffer damage, you will have the funds to replace it set aside. This is especially true if you keep the funds in an interest-bearing account with your UM foundation.

  2. Simplified Claims Process: The calculation of ACV simplifies the claims process for both the insured and the insurance provider.  The cost is what you paid for the asset minus the applicable depreciation.

What is RCV?

Replacement Cost, on the other hand, represents the current cost to reconstruct the building with like kind and cost materials. Unlike ACV, it does not consider depreciation and solely reflects the cost to replace the damaged or destroyed property with like kind and quality of materials. RCV should also not be confused with the market value of your property, as the market value is what your property could sell for and be greater or less than the replacement cost of your building.

Pros of RCV:

  1. Full Replacement Cost: RCV policies offer coverage without factoring in depreciation, ensuring that the insured can replace or repair the damaged property at its current market value.

  2. Greater Protection: Ministries opting for RCV policies enjoy higher coverage limits, providing greater protection in the event of a loss.

  3. Accurate Representation: For ministries with newer properties or equipment, RCV may provide a more accurate reflection of the true worth of their assets.

For personalized guidance on choosing the right valuation method and crafting an insurance policy tailored to your ministry's requirements, reach out to your trusted denominational insurance provider, United Methodist Insurance! We’re ready to assist you in navigating the complexities of insurance to adequately protect your ministry.


This content has been prepared by United Methodist Insurance Company (UMI) for informational purposes only. No article or document may accurately contemplate all possible scenarios or church resources. As such, this information is meant to foster discussion by the individual church and its members to develop a plan tailored to its own circumstances. UMI is providing this information with no warranties or guarantees of any kind and it should not be viewed as legal, financial, or other professional advice. All liability is expressly disclaimed. Any claim examples described herein are general in nature, may or may not be based on actual claims, and are for informational purposes only. Any coverage available for a claim is determined from the facts and circumstances of the claim as well as the terms and conditions of any applicable policy, including any exclusions or deductibles. In the event of a conflict with the content herein, the terms and conditions of any issued policy will control. Individual coverage may vary and may not be available in all states.

The commercial insurance coverages for United Methodist Insurance are sold and serviced directly or indirectly by Sovereign Insurance Agency (CA Lic. No. 0B01380) ("Sovereign") and underwritten by various available insurance markets. Sovereign pays United Methodist Insurance a royalty for the use of its intellectual property.


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