Glossary

Actual cash value

What an insurer pays for damaged property: the cost to repair or replace it today, minus a deduction for age and wear, so less than a new-for-old payment.

Also called: ACV, ACV settlement

Actual cash value is a way of settling a claim. The insurer works out what it would cost to repair or replace the damaged item today, then subtracts depreciation for age and wear. Most insurers and most states use that formula, replacement cost less depreciation, though a few states define the term by fair market value or restrict what can be depreciated, so your state's rules matter.

Say a hailstorm ruins a 12-year-old roof that would cost $15,000 to replace, and the adjuster treats that roofing as having a 20-year life. Depreciation is 60%, or $9,000, which leaves an actual cash value of $6,000 before your deductible comes off. A policy that pays replacement cost would eventually owe the full $15,000 once the work is done.

ACV is the usual basis for personal property unless you add a replacement cost endorsement, and it applies to roofs under an ACV roof endorsement or payment schedule. It is also the first payment on a replacement cost claim, with the withheld amount released later as recoverable depreciation. Read the loss settlement section of your policy before you need it. Our guide to how replacement cost and ACV differ shows the two side by side, and the depreciation calculator: actual cash value vs replacement cost lets you test your own numbers.

Last reviewed October 10, 2026

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Related terms

Replacement cost What it would cost to repair or rebuild with materials of like kind and quality at today's prices, with no deduction for age or wear. Depreciation The loss in an item's value from age, wear and obsolescence, which an adjuster subtracts when pricing what a claim should pay. Recoverable depreciation The part of a replacement cost payment an insurer withholds at first and releases after you finish the repair or replacement and send proof of the cost. Non-recoverable depreciation The age-and-wear deduction an insurer takes from a claim payment and never pays back, because the policy settles at depreciated value or repairs are not made. ACV roof endorsement An endorsement that pays wind and hail roof damage at replacement cost less depreciation, even when the rest of the home is settled at full replacement cost.

Related guides

Appliance and HVAC breakdown: insurance or warranty? Homeowners insurance excludes a furnace or dishwasher that simply fails but pays for the water, fire or smoke damage it causes. Who pays for what. Washing machine, water heater and dishwasher leaks A sudden appliance leak is usually covered for the water damage and tear-out, but not for the failed appliance. Where slow leaks, drains and wear change that. What flood insurance covers in a basement NFIP flood insurance covers only a short list of basement items, like the furnace, sump pump and unfinished drywall. What is excluded and how to fill the gaps. The California FAIR Plan explained What the California FAIR Plan covers and leaves out, how to pair it with a DIC policy, how it is funded, and how to move back to a regular insurer. Claim checks, holdbacks and when the money arrives Why a home claim pays in stages: depreciation holdbacks, mortgage-endorsed checks, what the ISO form says about timing, and how to plan cash for repairs. Class actions against home insurers How class actions against homeowners insurers work, the labor depreciation cases that shaped them, what a settlement notice means, and when you should opt out.

Related insurers

American Family Insurance Madison, Wisconsin mutual sold by exclusive agents in 19 states, with Homesite and partner programs reaching most others; the 6th-largest U.S. home insurer. American Modern Insurance Group Munich Re-owned specialty insurer for manufactured homes and for older, vacant, seasonal and rental homes that standard carriers turn down, sold through agents. Farmers Mutual of Nebraska (FMNE) Lincoln, Nebraska insurer founded by 22 farmers in 1891, selling home, farm and auto coverage through independent agents in Nebraska and the Dakotas. Liberty Mutual The 4th-largest U.S. home insurer, a Boston mutual holding company sold online and through independent agents; it retired the Safeco brand in April 2026. People's Trust Insurance Family-owned Florida insurer founded in 2008 that sells homeowners policies online, by phone and via agents and repairs many claims with its own contractor. Plymouth Rock Assurance Boston-based, privately held insurer founded in 1982 that sells homeowners in Massachusetts, Connecticut and New Hampshire online, by phone and through agents.

Related states

Nebraska Nebraska has no FAIR plan. State Farm leads, hail drives a $2,142 average HO-3 premium, and a valued policy law pays full limits on total losses. New Mexico New Mexico home insurance: State Farm leads, wildfire and burn-scar floods drive nonrenewals, and the FAIR plan now covers homes up to $750,000 at cash value. Oregon Oregon home insurance: premiums rank among the lowest in the U.S., but wildfire is reshaping the market and earthquake coverage must be bought separately. Wisconsin Wisconsin has the cheapest average HO-3 premium in the U.S., three home-state insurers in the top 10, an ACV-only FAIR plan and a big flood insurance gap.

Related tools

Coinsurance and insurance-to-value calculator Test your dwelling limit against the 80% insurance-to-value rule and see how much a partial loss claim shrinks if you fall short. Depreciation calculator: actual cash value vs replacement cost Estimate what belongings are worth after depreciation, what an actual cash value check would be, and how much a replacement cost policy pays back later. Home inventory builder Build a room-by-room list of belongings and replacement costs, compare the total with your personal property limit, and flag items over the standard limits. Homeowners quote comparison worksheet Enter up to five homeowners quotes in columns and see where the coverage differs, so the cheapest price is not just the least coverage. Roof claim payout estimator Estimate what a roof claim pays under replacement cost, actual cash value and roof payment schedule settlements, and what you would pay yourself.