Actual Cash Value Calculator (insurance ACV = replacement cost − depreciation)

Understanding the actual cash value calculator — concept and principle

This calculator estimates the actual cash value (ACV) of a damaged or stolen item for an insurance claim, using straight-line depreciation. It also shows the depreciation, the claim payment under an ACV policy and under a replacement cost policy, and the value lost per year. Use it to check an adjuster's figures for furniture, electronics, appliances or other personal property.

ACV is the replacement cost minus 30% depreciation; the deductible then comes off the claim.

How it is calculated

Depreciation = replacement cost × age ÷ useful life, limited by the maximum depreciation percentage you enter.
ACV = replacement cost − depreciation.
ACV policy payment = ACV − deductible (not below 0).
Replacement cost policy payment = replacement cost − deductible.
Value lost per year = replacement cost ÷ useful life.

The principle

Insurance aims to restore you to where you were, not to give you a better position. An item that is several years old has lost some of its value through wear and age, so an ACV policy pays today's price for a new item minus that lost value. Straight-line depreciation assumes the item loses the same amount each year of its useful life. A replacement cost policy pays to replace the item new, often in two steps: ACV first, then the withheld depreciation once you actually replace it.

Worked example

Default inputs: replacement cost $2,000, age 3 years, useful life 10 years, cap 100%, deductible $500.

Depreciation = 2,000 × 3 ÷ 10 = $600 (30% of replacement cost, under the cap).
ACV = 2,000 − 600 = $1,400.
ACV policy payment = 1,400 − 500 = $900.
Replacement cost policy payment = 2,000 − 500 = $1,500.
Value lost per year = 2,000 ÷ 10 = $200.

Each point is the calculator re-run with only “Replacement cost (new item today)” changed; the gold point is the default example. Change the inputs above and this chart follows your numbers.

Replacement cost (new item today)	Actual cash value (ACV)
500	$350
1,000	$700
1,500	$1,050
2,000	$1,400
2,500	$1,750
3,000	$2,100
4,000	$2,800

How to read the result

The difference between the two claim payments ($600 here) is exactly the depreciation, which is what a replacement cost policy adds. If the adjuster's ACV is much lower, ask which useful life and condition adjustment they used. A depreciation cap protects older items from being valued at almost nothing.

Common mistakes

Using the original purchase price instead of today's replacement cost.
Assuming every insurer uses straight-line depreciation and the same useful lives.
Forgetting the deductible.
Expecting the replacement cost payment before the item has been replaced, when the policy pays depreciation only afterwards.

Keep in mind: Insurers use their own depreciation schedules, condition ratings and policy terms. Treat the result as an estimate and read your policy. This is not financial or legal advice.

Frequently asked questions

What is the difference between ACV and replacement cost coverage?

ACV pays the depreciated value; replacement cost pays the cost of a new equivalent item.

How is the useful life decided?

Insurers use internal tables by item type; ask your adjuster which figure they used.

Can ACV be zero?

With no cap, an item at or beyond its useful life can reach zero; many policies limit depreciation.

Sources: Straight-line depreciation (cost × age ÷ useful life) as used in property-insurance claim estimates; insurers' own schedules vary

Checked 9 Nov 2026. Actual cash value as replacement cost minus depreciation with straight-line depreciation by age ÷ useful life: standard property-insurance claim arithmetic (insurers’ own schedules vary).

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