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Actual Cash Value
Actual cash value (ACV) or market value is the preferred standard by which most insurance companies would like to reimburse policy holders for losses as opposed to payment based on the replacement cost of an item, the method preferred by policy holders.
Actual cash value is determined by taking the replacement cost of the insured item (in the case of auto insurance the item would be your vehicle) and subtracting depreciation on the item. Actual cash value represents that dollar amount the policy holder could expect to receive for the insured item were it to be sold on the public market.
Insurance companies use a variety of criteria to determine depreciation. In the instance of an automobile, some factors that might come into consideration would be make and model year of the vehicle, its repair history, and the number of miles on the vehicle at the time at which the damage occurred.
More Glossary Terms Explained here
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