Insurance

Actual Cash Value (ACV) A claim payout based on replacement cost minus depreciation, so you get less than full replacement

Marcus Lee By Marcus Lee, Senior Insurance Editor · Updated 2026-06-09
← All Glossary Terms Definition
Actual Cash Value (ACV) is a claim-settlement method that pays the replacement cost of your property minus depreciation for age, wear, and condition. Because of that deduction, an ACV settlement pays less than replacement cost value (RCV), which reimburses you for a new equivalent item without subtracting for depreciation. ACV is a common default for older vehicles and some home contents, where insurers factor in how much value the item has lost over time. The exact depreciation calculation varies by insurer, item type, and your policy language. When you file a claim, your settlement check reflects what the item was worth at the time of loss, not what a brand-new replacement would cost. Review your policy to confirm whether your coverage settles claims on an ACV or RCV basis.
Also Known As
ACV Depreciated value Market value settlement Replacement cost less depreciation
Used in Context
  1. After your 12-year-old sedan was totaled, the insurer offered an ACV payout reflecting its depreciated worth rather than the cost of a new car.
  2. When water damaged your aging roof, the adjuster settled on an actual cash value basis, subtracting depreciation from the replacement estimate.
  3. Comparing quotes through Dreamy Leads, you noticed one policy paid contents at ACV while another offered replacement cost coverage.
Related Terms
Insurance Replacement Cost Value (RCV) Claim payout that covers the full cost to replace property new, with no depreciation taken out Insurance Collision Coverage Pays to fix or replace your own car after a crash, no matter who caused it Insurance Gap Insurance Covers the gap between your car's value and what you still owe if it's totaled Insurance Insurance Premium The amount you pay to keep your insurance coverage active
Frequently Asked Questions

What's the difference between ACV and replacement cost?

ACV pays the replacement cost of an item minus depreciation for age and wear, so your payout is lower. Replacement cost value (RCV) reimburses you for a new equivalent item without subtracting depreciation. ACV is a common default for older vehicles and some home contents.

Why is my ACV claim payout so low?

ACV subtracts depreciation from an item's replacement cost, reflecting its value at the time of loss rather than the price of a new one. Older items lose more value, so payouts shrink. The exact depreciation amount varies by insurer, item type, and your policy terms.

Can I get replacement cost coverage instead of ACV?

Often, yes. Many insurers offer replacement cost value (RCV) coverage for an additional premium, which avoids the depreciation deduction. Availability and cost vary by insurer, item, and state. Review your policy or ask your agent to confirm whether claims settle on an ACV or RCV basis.

Ready to compare insurance options?

Free quotes from licensed experts — no spam, no obligation, results in 60 seconds.

Get Free Quotes →

Sources

Get Free Quotes → All Terms