If you’ve ever had to make a claim for a lost or damaged item, you may have wondered how your home insurance company determined the amount you received. There are a couple of ways insurers go about calculating your claim amount – one of which is known as Actual Cash Value (ACV).
ACV refers to the cost of replacing a lost or damaged item that’s in similar condition to yours at the time of loss. That means that the amount you’d receive would be equal to however much the item is worth today. ACV takes into consideration wear-and-tear over time which can decrease the item’s value.