Actual Cash Value

Actual Cash Value (ACV) refers to the amount of money an insurance policy would pay for a lost or damaged item, reflecting its current worth. ACV is calculated by taking the replacement cost of the item and subtracting depreciation, which accounts for age and wear. For example, if your five-year-old phone costs $800 to replace but has depreciated to $400, the ACV would be $400. This concept is important in understanding how much you might receive from your insurance company when you file a claim for personal property.