noun · also: ACV
actual cash value
In plain English
Replacement cost minus depreciation — what the item is worth today given its age and condition.
On older roofs, ACV settlement is the gotcha — you get the depreciated value of a 20-year-old roof, not the cost of a new one. Some carriers even have separate ACV roof endorsements that quietly downgrade an otherwise-replacement-cost policy.
What it covers
The depreciated value of damaged property at the time of loss. Calculated as replacement cost minus depreciation for age, wear, and obsolescence.
What it does not cover
It is NOT 'fair market value.' On a personal auto totaled in an accident, ACV is calculated on a national valuation database (CCC One, Mitchell), not what you paid or what comparable cars are listed for.
Where it trips people up
Roof endorsements. Wind/hail roof claims are increasingly being settled ACV via endorsement, even on policies that are otherwise replacement cost. Always ask whether ACV applies separately to the roof.
The technical version
The cost to replace damaged property minus depreciation, accounting for age, wear, and obsolescence. The standard for most older property forms and many auto coverages.