Actual Cash Value Calculator

What actual cash value means

Actual cash value, shortened to ACV on most policies, is what your property is worth today. The working formula insurers use is actual cash value = replacement cost minus depreciation. Take a dishwasher that sells for $900 new and is 6 years into a 12 year life. Straight-line depreciation takes $75 a year, so 6 years have consumed $450, and the cash value today is $450.

The term shows up in three places, and the number is built differently in each. On a homeowners or renters policy, ACV coverage pays the depreciated value of damaged belongings or building parts, and the Triple-I homeowners insurance handbook warns that the payout can fall short of the full repair bill. On an auto policy, a totaled car's ACV is its market value, built from comparable local sales instead of a formula. On a tax return, business property follows a schedule such as the ones in IRS Publication 946. The calculator on this page runs the formula-driven version, which fits claims on buildings, contents and equipment. For a car or a whole house, treat its output as a starting point and let comparable sales settle the final number.

The straight-line formula, on an $18,000 roof

Straight line is where most adjusters start. Divide replacement cost by useful life, multiply by age, and subtract:

annual depreciation = 18000 / 20 = 900 a year

depreciation to date = 900 x 12 = 10,800

actual cash value = 18000 - 10800 = 7,200

The roof has used 60 percent of its life, so it holds 40 percent of its cost: $7,200 of the $18,000 a new one would run. Read across the whole life:

Two inputs deserve care. Replacement cost means the price to install the item new today, which for a roof includes tear-off, materials and labor, not the price on an old receipt. Useful life comes from the carrier's depreciation schedule or the adjuster's judgment, and it is usually shorter than how long the item survives in a well kept house.

Declining balance takes the biggest bite early

Accounting schedules and some insurers use a method that front loads the loss of value. Each year removes a fixed share of what is left, so an item loses 15 percent of $12,000 in year one but only 15 percent of what remains in year ten. The formula is:

actual cash value = salvage + (cost - salvage) x (1 - rate)^age

Run a $12,000 system at 15 percent a year: 12000 x 0.85 = 10,200 after one year, and 12000 x 0.85^6 = 4,526 after six. Straight line on the same cost over a 12 year life removes 1,000 a year and lands at 6,000 at year six. The two curves side by side:

Check which method your policy uses before you argue a number. A schedule that reads 15 percent of original cost per year is straight line on cost, even though the phrase sounds like declining balance. The declining option in the calculator models items that lose most of their value while young, which matches electronics and vehicles better than it matches roofs.

ACV against replacement cost on the same claim

Same hailstorm, same house, two coverage choices. The roof is 12 years old, the water heater 8, the carpet 6:

The water heater line: 2400 / 12 = 200 a year, times 8 years of use, leaves 800. Carpet: 3600 / 10 = 360 a year, 6 years in, leaves 1,440. Under ACV coverage the insurer pays 9440 - 1000 = 8,440 after the deductible. Under replacement cost coverage the same damage prices at 24000 - 1000 = 23,000, capped by the policy limit. The 14,560 dollar gap is the coverage you give up when you buy the cheaper policy.

Many replacement cost policies settle in two steps. The first check covers ACV. The rest, called recoverable depreciation, is released once you finish the repairs and send in receipts. Skip the work and the withheld amount stays with the insurer, so a payout you never claim is money you never see.

Totaled cars: ACV is a market number

Auto insurers skip the depreciation formula and price the car against the market. An adjuster pulls comparable listings for the same year, make, model, trim and mileage in your area, then adjusts for condition and options. A worksheet for a 2019 sedan with 78,000 miles:

The last line is the actual cash value, 14,300. Take off the 500 deductible and the settlement check is 13,800. State rules bend the number at the edges: some states add sales tax and title fees to the check, and if you keep the wrecked car the insurer deducts its salvage value. The Triple-I guide to settling claims describes the payment as what the car would have sold for moments before the loss, which is why a clean service history and fresh tires move it more than any formula would.

Useful-life numbers adjusters work from

Useful life drives the whole straight-line calculation, and it is the input people get wrong. The figures below sit in the middle of the ranges carrier schedules publish:

Three cautions. Carrier schedules differ, sometimes by a lot on roofs, where some pay by remaining shingle life instead of age. Condition can pull an item above or below the table: a 5 year old dishwasher run twice a day since installation is not the same asset as a 5 year old one in a guest cottage. And tax lives are a different animal. Publication 946 puts computers and office equipment on 5 year recovery periods, furniture and fixtures on 7, residential rental buildings on 27.5 and nonresidential buildings on 39. Those schedules compute a tax deduction, not an insurance settlement.

Land never depreciates, which is why a total loss on an ACV policy can pay the home's fair market value rather than a depreciated construction cost, as the Triple-I guide for homeowners explains. The building wears out; the ground under it does not, and the two get valued separately.

Why the check differs from this calculator

The calculator produces the depreciation math, and the settlement adds policy machinery around it. Expect the real check to move for these reasons:

Deductible. Subtracted from the ACV, from a flat $500 to percentage deductibles of 1 to 2 percent of dwelling coverage in hail and wind states.

Policy limit. Payment stops at the coverage amount, even when the depreciated value is higher.

Betterment. A worn part replaced with a new one can be discounted because you gained something: new brake pads on an old rotor, a bundle of new shingles on an aged roof.

Matching. Carriers pay to replace the damaged section and will not fund a full re-roof just to match color.

Ordinance or law. Code upgrades required during the repair are excluded from many ACV settlements unless you bought the endorsement.

Overhead and profit. Some carriers omit contractor overhead and profit on smaller claims, which trims 10 to 20 percent off the replacement cost before depreciation even starts.

None of these are depreciation. When a check lands under the calculator's number, the reason is usually one of the six above, not the arithmetic.

How to use this calculator

The box starts on the roof example above: $18,000 of replacement cost, 12 years old, a 20 year life, no salvage value. Type the replacement cost new, the item's age, its useful life and any salvage value. Pick straight line to match most insurance schedules, or declining balance with a rate to model electronics and vehicles. The results show the annual depreciation, the depreciation to date, the actual cash value, its share of the replacement cost, the remaining useful life, and the same item run through the other method for comparison.

Everything runs in your browser, and nothing you type is uploaded or stored. The output is an estimate for planning a claim or a sale; the binding figure comes from your policy's definitions and, on a disputed claim, from the appraisal process your state allows.