Actual cash value

All you want to know about Actual cash value

In the property and casualty insurance industry, actual cash value (ACV) is a method of computing what an insurer will pay an insured, after a loss, for a specific insured item. It is often a less costly method of insuring articles or structures, but it is also less preferred.

ACV is computed by subtracting depreciation from replacement cost. Replacement cost is the preferred method of insuring.

An example would be as follows: a man purchases a television set for $2,000 in 1990. If he were to attempt to sell the TV today, it may only be worth $100 to a buyer. ACV insurance would only pay $100 if the TV were stolen or damaged in a fire. Conversely, replacement cost insurance would pay the cost of purchasing an equivalent or like kind and quality TV in today's prices.

See also

Cash value

 This economic term article is a stub. You can help Wikipedia by expanding it.
Retrieved from "http://en.wikipedia.org/wiki/Actual_cash_value"

No comments have been added.



Your name:

City:

Country:

Your comments:

Security check *
(Please enter the number into adjoining box)

 
up to content ยป

  • Ads

           
eXTReMe Tracker