Property claims glossary
What is actual cash value (ACV)?
Actual cash value (ACV) is what damaged property was worth at the time of loss, usually calculated as replacement cost minus depreciation. On a property claim it often sets the first payment, so the depreciation figure decides how much a family receives before repairs begin.
Worked example · fictitious claim
A 12-year-old roof costs $20,000 to replace, and the adjuster applies 50% depreciation, or $10,000. The ACV is $20,000 − $10,000 = $10,000. After a $1,000 deductible, the first payment is $10,000 − $1,000 = $9,000.
How it affects a settlement
On a replacement cost policy, the carrier typically pays ACV first and holds back the depreciation until repairs are done. If an endorsement settles the roof at ACV only, that depreciation is never owed, so the settlement basis has to be confirmed before the first check.
In practice
The value of damaged property at the time of loss: replacement cost minus depreciation. Many policies settle at ACV first and release the depreciation later, once repairs are complete. Roof surfacing endorsements often convert older roofs from replacement cost to ACV, one of the most commonly missed settlement changes in property claims.
Related
Replacement cost value (RCV) · Recoverable depreciation · Policy coverage checking · property claims glossary