Actual Cash Value (ACV)
The value of your property minus depreciation due to age, wear and tear, or obsolescence.
Detailed Explanation
Actual Cash Value is one method insurers use to determine how much to pay for a covered loss. Unlike replacement cost coverage, ACV takes into account depreciation, which means you'll receive less money for older items.
Practical Example
Sarah's 10-year-old couch was damaged in a covered water leak. Though a new similar couch would cost $1,500, her insurance company determined the ACV of her old couch was only $300 after accounting for a decade of depreciation, so that's the amount they paid for her claim.
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