Actual Cash Value (ACV)
An amount equal to the replacement cost of lost or damaged property at the time of loss, less depreciation. With regard to buildings, there is a tendency for the ACV to closely parallel the market value of the property. If there is a covered loss to the insured dwelling, the insurance company will pay either the depreciated value of the damaged dwelling at the time of loss or the cost of repairing the property with like construction, but only up to the policy's limit of liability. ACV also refers to the maximum limit of auto insurance coverage. The insurer will usually only pay the ACV or the cost to repair or replace the damaged or stolen property, whichever is less. Depreciation and the condition of the vehicle are also considered in determining the ACV. See also Market Value.
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