Actual cash value

In the property and casualty insurance industry, actual cash value (ACV) is a method of computing what an insurer will pay an insured, after a loss, for a specific insured item. It is often a less costly method of insuring articles or structures, but it is also less preferred.

ACV is computed by subtracting depreciation from replacement cost. Replacement cost is the preferred method of insuring.

An example would be as follows: a man purchases a television set for $2,000 in 1990. If he were to attempt to sell the TV today, it may only be worth $100 to a buyer. ACV insurance would only pay $100 if the TV were stolen or damaged in a fire. Conversely, replacement cost insurance would pay the cost of purchasing an "equivalent" or "like kind and quality" TV in today's prices.

ee also

Cash value

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Look at other dictionaries:

  • actual cash value — n 1: the cost of replacing or repairing damaged property less any applicable depreciation 2: fair market value Merriam Webster’s Dictionary of Law. Merriam Webster. 1996 …   Law dictionary

  • actual cash value — The price in cash obtainable in a fair market. The fair cash value. Birmingham Fire Ins. Co. v Pulver, 126 Ill 329, 18 NE 804. Cost of reproduction less depreciation, although important evidence of value, is not an exclusive test of actual cash… …   Ballentine's law dictionary

  • Actual Cash Value — The amount equal to the replacement cost minus depreciation of a damaged or stolen property at the time of the loss. It is the actual value for which the property could be sold, which is always less than what it would cost to replace it.… …   Investment dictionary

  • actual cash value — noun Date: circa 1946 money equal to the cost of replacing lost, stolen, or damaged property after depreciation …   New Collegiate Dictionary

  • actual cash value — (ACV) The amount of money a dealer has invested in the purchase of a used vehicle and any additional costs to repair the unit in order to get it ready for resale …   Dictionary of automotive terms

  • Cash value — The cash value of an insurance contract, also called the cash surrender value or surrender value, is the cash amount offered to the policyowner by the issuing life carrier upon cancellation of the contract. This term is normally used with a life… …   Wikipedia

  • cash value — The cash value of an article or piece of property is the price which it would bring at private sale (as distinguished from a forced or auction sale); the terms of sale requiring the payment of the whole price in ready money, with no deferred… …   Black's law dictionary

  • cash value — The amount for which an article or piece of property may be sold at a sale which is not forced or compelled upon the seller where the terms of sale call for cash, no credit being extended to the purchaser; market value, fair market value, or… …   Ballentine's law dictionary

  • cash value — See actual cash value …   Dictionary of automotive terms

  • fair cash value — Actual cash value. The price which the property in question will bring in a fair market, after fair and reasonable efforts have been made to find the purchaser who will give the highest price; the fair or reasonable cash price for which the… …   Ballentine's law dictionary

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