Actual cash value
Updated for plan year 2026
In plain terms
Actual cash value (ACV) is a valuation method that pays what an item is worth today: roughly its original cost minus depreciation for age and wear. It is cheaper than replacement cost but pays much less on anything more than a couple of years old, because insurers apply a depreciation schedule to every item.
A plain example
That same stolen five-year-old laptop, valued at actual cash value, might pay only a few hundred dollars (a fraction of what a new one costs) because five years of depreciation are subtracted.
Why it matters
ACV is where underinsurance hides: you can carry a perfectly adequate limit and still be badly short at claim time simply because everything is valued after depreciation. Knowing which setting your policy uses is essential.