Actual Cash Value Calculator
Actual cash value, or ACV, is what an insurer pays for a damaged item on an ACV policy: the cost to replace it today minus depreciation for age and wear. It is the basis for many auto, dwelling, and contents settlements, and it is almost always less than replacement cost. This calculator applies the standard straight-line method, spreading depreciation evenly across the item's useful life, capping it so ACV never falls below zero, and showing the depreciation taken so far. Replacement cost, age, and useful life are all your inputs, so nothing is assumed.
Actual cash value formula
Depreciation per year = replacement cost / useful life
Accumulated depreciation = min(replacement cost, dep per year * age)
ACV = replacement cost - accumulated depreciation
ACV % = ACV / replacement cost * 100
Depreciation is capped at the replacement cost so ACV never goes negative. Beyond the useful life, ACV is zero (or salvage value if your policy assigns one).
ACV context
- ACV policies pay replacement cost minus depreciation; RCV policies pay the full replacement cost.
- Useful life and depreciation schedules differ by item type and by insurer.
- Some policies use other depreciation curves; straight-line is the most common and transparent.
- Recoverable depreciation may be paid later if you actually replace the item, depending on policy terms.
- State insurance departments publish consumer guidance on how ACV settlements work.
Actual cash value: frequently asked questions
What is actual cash value?
Actual cash value (ACV) is replacement cost minus depreciation. It is what an insurer pays for a damaged item on an ACV policy: the cost to replace it today, reduced for age, wear, and remaining useful life. Replacement-cost-value (RCV) policies, by contrast, pay the full replacement cost without subtracting depreciation.
How is ACV calculated here?
This tool uses the standard straight-line method: depreciation per year = replacement cost / useful life. Accumulated depreciation = depreciation per year times age, capped at the replacement cost. ACV = replacement cost minus accumulated depreciation. All inputs are yours, so no figure is assumed.
What useful life should I use?
Useful life depends on the item: a roof, an appliance, and clothing all differ. Use the manufacturer's expected life, an appraiser's figure, or your insurer's depreciation schedule. Enter it as a user-editable input because there is no single number that fits every property type.
Can ACV ever go below zero?
No. Once an item is fully depreciated, its ACV is zero, not negative. This calculator caps accumulated depreciation at the replacement cost so ACV never drops below zero, which matches how insurers apply depreciation.
Why does ACV matter in a claim?
On an ACV policy you receive only the depreciated value, so an older item yields a smaller payout than buying new. Knowing ACV before a loss helps you decide whether to pay extra for replacement-cost coverage, which restores the gap that depreciation would otherwise leave.
Official sources
- National Association of Insurance Commissioners: NAIC consumer guidance on claims settlement.
- Internal Revenue Service: IRS guidance on depreciation and useful life.
Reviewed by the CalculatorHub team, edited by James Graham, 17 June 2026. See our methodology.