What does the term "actual cash value" refer to in property insurance?

The term "actual cash value" in property insurance is defined as the replacement cost of an item minus depreciation. This means that when an insurance claim is filed, the insurer will calculate the value of the lost or damaged property based on what it would cost to replace that property today, and then adjust that figure by accounting for the depreciation that has occurred over time.

For example, if you have a five-year-old television that was originally purchased for $1,000, its actual cash value at the time of a claim might be calculated as the current replacement cost of a similar television less the depreciation for the five years of use. This methodology reflects the wear and tear, obsolescence, or reduction in value that the property has experienced.

In the context of the other options, "replacement cost without depreciation" would suggest the full cost to replace the property, which does not factor in the decrease in value and thus does not represent actual cash value. "Market value of the property" can be influenced by various factors that might not correlate directly with the replacement cost and depreciation involved in insurance assessments. "Intrinsically assessed value" is not a standard term used in property insurance and does not accurately convey the concept of actual cash value as understood within the