Actual cash value
Pays the depreciated value of property — what it's worth today, not what it costs to replace.
Full definition
Actual cash value (ACV) coverage pays the current market value of your property at the time of loss, accounting for depreciation due to age and wear. ACV policies have lower premiums than replacement cost value (RCV) policies, but pay significantly less at claim time for older items. For a 7-year-old sofa that cost $1,200 new, ACV might pay only $300.
Real-world example
Your roof is 15 years old and is damaged by a storm. Replacement cost: $12,000. With ACV coverage accounting for depreciation, your insurer pays $5,800.
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Pays the depreciated value of property — what it's worth today, not what it costs to replace.
Related terms
- Replacement cost value
Pays to replace your property with a new equivalent, no depreciation deducted.