Actual Cash Value (ACV)

Definition

Actual Cash Value (ACV) is an insurance valuation method that pays the replacement cost of damaged property minus depreciation. For example, if a 10-year-old carpet is damaged and a new carpet costs $2,000, ACV might only pay $800 after accounting for 10 years of wear. ACV policies typically have lower premiums than replacement cost policies but may leave homeowners with out-of-pocket expenses. Understanding your policy type is important when filing a restoration claim.