What is Actual Cash Value?

Actual Cash Value is a common form of valuation that insurance companies use.

Generally speaking the two most common forms of valuation are Cash Value and Replacement Value.

Replacement Value is generally considered the better, more expensive coverage version.   For personal property, it pays the amount to attempt to replace something that was destroyed or lost.  There are limitations to this.

Actual Cash Value is the depreciated value.

For example a T Shirt that has been worn and washed and hence used will be worth only a fraction of what you paid for it.  Perhaps 50%.

So if your T Shirt is destroyed in a fire.  Would you rather have the $8 Value for it or the $16 repurchase amount?