Actual Cash Value
A method of valuing damaged or destroyed property that accounts for depreciation. Your insurer pays the replacement cost minus wear and tear. Actual cash value payouts are lower than replacement cost payouts, which means you may have to pay the difference out of pocket.
Real-World Example
Sam's 8-year-old TV was stolen. It originally cost $1,200, but the actual cash value payout was only $400 because of depreciation.
Related Terms
Disclaimer: This glossary entry is for informational purposes only and does not constitute financial or insurance advice. Consult with a licensed insurance professional for personalized guidance. GuardianChoices may earn affiliate commissions from links on this site — see our advertiser disclosure.
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