Glossary
Actual Cash Value (ACV)
An insurance payout method that pays what damaged or stolen property was worth at the time of loss, which is generally replacement cost minus depreciation. It is how most total loss car claims are valued.
Actual cash value (ACV) is one of the two main ways insurance policies measure a loss. The other is replacement cost, which pays what it costs to replace the item with a new one. ACV pays less, because it subtracts depreciation for age, wear, and condition.
State law often defines it. Under California Insurance Code section 2051, for a policy that pays actual cash value, the recovery for a total or partial loss to a structure or its contents is the cost to repair, rebuild, or replace the item, less a fair and reasonable deduction for physical depreciation based on its condition at the time of the loss, or the policy limit if that is lower. Other states use similar tests, and for vehicles, ACV usually means the market value of a comparable car before the crash.
ACV is at the heart of many insurance class actions:
- Total loss vehicles. Lawsuits claim insurers used valuation reports with unexplained "condition adjustments," or left out sales tax and title fees, to push ACV below what a comparable car actually cost.
- Labor depreciation. In property claims, policyholders have challenged insurers that depreciated the cost of labor, not just materials, reducing ACV payments for home repairs.
- Comparable selection. Using cheaper or distant comparable vehicles to lower the valuation.
If an insurer totals your car or pays ACV on a home claim, ask for the full valuation report and compare it with real listings. See our pages on total loss car payouts and the State Farm total loss settlement.
Related on Best Class Actions
Sources.
Statutes, court rules, appellate opinions, and bar publications we relied on. See our editorial standards.