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ACTUAL CASH VALUE

Actual Cash Value means the amount that equals the cost of replacement (subtracted from depreciation) for any property that has been stolen/damaged at the time of the incident.

Definition

Actual cash value is a significant term for the property, real estate, and insurance industries. This is the amount that is calculated as the cost to replace any stolen/damaged property, minus the cost of depreciation. This is the actual value at which a property may be sold. It is always lesser than what it costs to replace the same.

Use of Actual Cash Value in Real Estate

Actual cash value is used by the insurance industry. Many insurers use this parameter for working out the amount payable under home insurance to any homeowner, in case of any damages, thefts, and other incidents. In this case, the deprecation cost of the property is calculated first, before being subtracted from the replacement cost. This is used to undertake valuation exercises for damaged properties.

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