Actual Cash Value (ACV)
A valuation method that calculates the replacement cost of an item MINUS depreciation for age and wear-and-tear.
Actuarial & Contractual Mechanics
Actual Cash Value (ACV) represents the replacement cost of damaged property minus accumulated physical depreciation and obsolescence. In auto insurance, total loss claims are paid out at ACV. Compare financial differences in our Actual Cash Value vs. Replacement Cost Analysis and calculate vehicle coverage on our Car Insurance Coverage Calculator.
A kitchen fire destroys an 8-year-old refrigerator. Replacement cost would pay $1,200 for a new fridge today; ACV pays only $350 reflecting 8 years of depreciation.
ACV settlements rarely provide enough cash to purchase a brand-new equivalent item or pay off an existing auto loan. Read our claim guide on What is Actual Cash Value vs. Replacement Cost in a Claim? and study Jordan's California Auto Case.
Frequently Asked Questions About Actual Cash Value (ACV)
Clear definitions, policy implications, and related coverage calculators.