What Is Actual Cash Value (ACV)?
Actual Cash Value (ACV) is what your property is worth today: its replacement cost minus depreciation for age and wear. An ACV settlement pays that depreciated value, so it is usually less than the cost of a brand-new replacement.
ACV is common for things that lose value over time, such as roofs, vehicles, and contents. It contrasts with replacement cost coverage, which pays to replace the item new without deducting depreciation. Ask your broker which basis your policy uses.
Frequently asked questions
How is actual cash value calculated?
Actual cash value is the replacement cost of an item today minus depreciation for its age, wear, and condition. For example, a ten-year-old roof is settled at what a new roof costs now, less ten years of wear.
What is the difference between actual cash value and replacement cost?
Replacement cost pays to replace an item with a new equivalent, with no deduction for age. Actual cash value deducts depreciation, so it usually pays less. Replacement cost coverage costs a bit more but pays more at claim time.
Is actual cash value or replacement cost better?
Replacement cost almost always leaves you better off after a loss because it does not deduct depreciation. We generally recommend replacement cost on homes and key contents, and we point out where actual cash value applies so there are no surprises at claim time.
Questions about Actual Cash Value?
Our Ontario brokers can explain how it applies to your policy.
Talk to a Roughley broker