Found in some property & equipment policies, it’s defined as the cost to replace an item less depreciation.
For example you have sound equipment valued at $10,000 with a useful life of 10 years. Therefore the equipment loses $1,000 in value each year you own it. In year 5, the equipment is destroyed or stolen. Because the useful life left was 5 years at the time of the loss, the Actual Cash Value that you would be paid is $5,000 (5 years of useful life left X $1,000 per year).
Also see: Replacement Cost
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