What Is Actual Cash Value?
Actual cash value is an insurance payout method that pays replacement cost minus depreciation for the age and wear of the damaged item — as opposed to replacement cost coverage, which pays the full cost of a new equivalent regardless of age.
Actual Cash Value vs. Replacement Cost (Insurance)
Pays replacement cost minus depreciation for age and wear — a lower payout, but a cheaper policy.
Pays the full cost of a new equivalent item or structure, regardless of the age of what was damaged.
Related Terms
More Owning Terms
This definition is provided for general educational purposes and is not financial, legal, tax, or real estate advice. Verify important decisions with appropriately qualified professionals.
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