Actual Cash Value

Think of actual cash value as the eBay price of used items. It’s how much an item would go for today (same make and model), minus depreciation.

How to calculate Actual Cash Value?

What’s actual cash value?

Actual cash value, or ACV, is a way in which some insurers price out most personal property claims to renters. Meaning, if your bike is stolen, most insurers will calculate the bike’s actual cash value when determining how much they’ll pay you for it

Insurers calculate ACV by:

Figuring how much it would cost to replace your stolen or damaged property with a similar item today (aka the replacement cost)

Subtracting the loss in value over time due to age, wear, and tear (depreciation)

The equation for ACV looks like this:

Replacement Cost – Depreciation = Actual Cash Value

So, say someone stole a computer you originally bought for $2,000, and it was 2 years into an 8 year life span (25% depreciation means $500). If that same computer is going for $1,500 today (the replacement cost), the actual cash value of your computer would be $1,000.