Actual Cash Value Calculator
The Actual Cash Value (ACV) Calculator estimates what an insured item is worth today after depreciation. It takes the replacement cost — what it would cost to buy the item new — and reduces it by the percentage the item has depreciated, giving the figure many insurers use to settle claims.
Formula
ACV = Replacement Cost × (1 - Depreciation%)
- Actual Cash Value = Replacement Cost × (1 − Depreciation ÷ 100).
- Replacement cost is what the item would cost to buy new today.
- Depreciation percentage reflects the item's age, condition, and remaining useful life.
- A fully depreciated item (100%) has an ACV of zero; insurers may still apply a minimum or salvage value.
- ACV settlements differ from replacement-cost settlements, which pay the full new price without a depreciation deduction.
Example Calculation
Inputs
- Replacement Cost (PKR): 1000000
- Depreciation %: 20
An item that costs 1,000,000 to replace, depreciated 20%, has an actual cash value of 1,000,000 × (1 − 0.20) = 800,000.
Frequently asked questions
What is actual cash value?
Actual cash value (ACV) is the replacement cost of an item minus depreciation — in other words, what the item is worth today, not what it costs new.
How is ACV different from replacement cost?
Replacement cost pays to buy the item new. ACV pays the depreciated value, so an ACV settlement is usually lower for older items.
How is depreciation estimated?
Insurers typically base it on the item's age relative to its expected useful life and its condition. Enter that percentage to see the resulting value.
Why does my claim pay less than replacement cost?
If your policy is ACV-based, the insurer subtracts depreciation. A replacement-cost policy avoids that deduction but usually costs more in premiums.
Can ACV be zero?
If depreciation reaches 100%, the actual cash value is zero, though policies often apply a minimum or salvage value.