Actual Cash Value

Actual Cash Value (ACV) is a depreciated value being today's purchase price new, less depreciation. It cannot exceed the amount that it would cost to repair or replace the lost or damaged property. The actual cash value is usually considered to be the cost of replacing the property with something of like quality and kind.

A simple formula to use is Actual Cash Value equals Replacement Cost Less Depreciation. Of course the amount of depreciation is affected by the condition, what if any resale value and the normal life expectancy of the object.

A person could insure a vehicle for $10,000 but if the vehicle is actually only worth $5,000 and it is stolen then the payout will not exceed the true value of $5,000. If this same vehicle had an appraisal on file for the $10,000 then the insurance company would consider depreciation from the date of the appraisal. If you have any question about the value of your property then you need to discuss this with your insurance agent or broker.

Take control of your insurance. Ask questions and get answers.