Defined term
Actual cash value (ACV)
Actual cash value is the depreciated value of damaged property at the time of loss — replacement cost minus accumulated depreciation.
ACV is the standard initial payment under most property-insurance policies. The insurer pays the depreciated value first, holding back the depreciation amount until the insured actually completes repairs and submits proof. Once repairs are documented, the holdback releases as replacement cost.
Insurers routinely apply aggressive depreciation: a 10-year-old roof depreciated 50%, a building component depreciated 60%. Challenging the depreciation schedule is one of the most consistent sources of recovery in underpayment work — building components with 20-year useful lives should not be depreciated 50% at year 10.