Replacement cost minus depreciation, depending on policy terms.
Why it matters
It can change claim payment after age, wear, or condition are considered.
Example
A ten-year-old couch may not be valued like a new couch.
Common mistake
Assuming ACV always pays enough to buy a new replacement.
Related terms
replacement-cost;recoverable-depreciation
Definitions are educational summaries. The policy's definitions and applicable law control a specific claim or coverage question.