Replacement Cost Value Sue Blakely asked 2 years ago
Replacement Cost Value

I have a quote from my HO insurance for a water leak. It’s showing GCO&P on the quote plus RCV. I know the GCO&P is the profit the contractor is making, and RCV is the replacement cost value the insurance company is paying. Should the contractor be charging the RCV or what? Or can I deduct the GCO&P from the RCV the insurance company is giving me because it’s less? I did one change order, for example, I purchased on my own a new bathroom vanity/mirror that says RCV is $649.19. Contractor is doing a change order, giving me credit for $419.13. Where did that credit come from? Shouldn’t it be $230.06 more? I have had some bad contractors here in Texas since I have moved here 5 years ago do work for me and do not want to get screwed again! Thank you anyone for your help!!

1 Answers
Jim Beneke Jim Beneke Expert answered 2 years ago

RCV stands for Replacement Cost Value. That is the cost of making all the repairs, including GCO&P (General Contractors Overhead and Profit), which is usually 20%. The contractor is entitled to the 20% on any work that he is contracted to complete, or on any change orders that you approve. I am not clear on situation with the bathroom vanity mirror. If you purchased it rather than having the contractor do so, he may be giving you back the money he had in his estimate / contract for the mirror itself. The difference might be the cost of the installation. Assuming he hangs the mirror, that might work out okay. You can also try asking your contractor for more details about the credit. Good luck!