Actual cash value (ACV) is the initial valuation method applied in the commercial property policy.Even if the replacement cost option is chosen, some property continues to be valued at ACV. Actual cash value is defined as the cost new (replacement cost) on the date of the loss minus physical depreciation. “Physical” is highlighted because there are many different types of depreciation: depreciation due to obsolescence, accounting depreciation and economic depreciation. None of these relate to the insurance definition of depreciation. Physical depreciation results from use and ultimate wear and tear meaning that the insured does not get paid for the “used up” value of the property.
ACV is also used in auto.In auto ACV is replaced with like kind and quality.This article be sent to all insurance companies and should enlighten the industry as to the definition!
They are all essentially lumped into one definition. If they cannot find an exact replacement then theowner of the euipment needs to have stated value on the item otherwise the insurance company can pay out whatever they decide is reasonable equitable replacement cost.
Sounds like we have a double standard within the industry!
Well, where is the double standard when talking about different classes of products? On the one-hand, a “one-of-a-kind” product will have varying “costs” of production depending on the experience of the producer, whereas, mass produced products will have more exact costs due to economies of scale ,and established final costs available to the public in general. From my claims work experience, insurance companies do NOT rely upon arbitrarial replacement costs in settlement of Replacement Cost claims. They could end up on court without a leg to stand on. Also, I don’t recall seeing automobile policies providing Replacement Cost coverage, therefore you are comparing apples to oranges.
Quite contrare. You are speaking of mass production if I am not mistaken.I am talking about an item wether it be an auto,motorcycle or what have you.Could be jewelry! If it is not exact then they are not fullfilling their obligation this is why a stated value is your likely best choice on something valuable and at the same time may be a rarity.
Replacement cost was replaced with ACV because an actual cash value can be obtained easier than a replacement due to those rare circumstances where the company could not locate Like,Kind and Quality. I may have said it backwards in my earlier post.
Who is to say that in certain circumstances the loss payee will receive the same goods they had prior to the loss.
A policy reads that they are to put the claimant in the same position as they were prior to the loss.In some circumstances that is not possible so compensation arguements commence.
We have updated our privacy policy to be more clear and meet the new requirements of the GDPR. By continuing to use our site, you accept our revised Privacy Policy.
Actual cash value (ACV) is the initial valuation method applied in the commercial property policy.Even if the replacement cost option is chosen, some property continues to be valued at ACV. Actual cash value is defined as the cost new (replacement cost) on the date of the loss minus physical depreciation. “Physical” is highlighted because there are many different types of depreciation: depreciation due to obsolescence, accounting depreciation and economic depreciation. None of these relate to the insurance definition of depreciation. Physical depreciation results from use and ultimate wear and tear meaning that the insured does not get paid for the “used up” value of the property.
ACV is also used in auto.In auto ACV is replaced with like kind and quality.This article be sent to all insurance companies and should enlighten the industry as to the definition!
They are all essentially lumped into one definition. If they cannot find an exact replacement then theowner of the euipment needs to have stated value on the item otherwise the insurance company can pay out whatever they decide is reasonable equitable replacement cost.
Sounds like we have a double standard within the industry!
Well, where is the double standard when talking about different classes of products? On the one-hand, a “one-of-a-kind” product will have varying “costs” of production depending on the experience of the producer, whereas, mass produced products will have more exact costs due to economies of scale ,and established final costs available to the public in general. From my claims work experience, insurance companies do NOT rely upon arbitrarial replacement costs in settlement of Replacement Cost claims. They could end up on court without a leg to stand on. Also, I don’t recall seeing automobile policies providing Replacement Cost coverage, therefore you are comparing apples to oranges.
Quite contrare. You are speaking of mass production if I am not mistaken.I am talking about an item wether it be an auto,motorcycle or what have you.Could be jewelry! If it is not exact then they are not fullfilling their obligation this is why a stated value is your likely best choice on something valuable and at the same time may be a rarity.
Replacement cost was replaced with ACV because an actual cash value can be obtained easier than a replacement due to those rare circumstances where the company could not locate Like,Kind and Quality. I may have said it backwards in my earlier post.
Who is to say that in certain circumstances the loss payee will receive the same goods they had prior to the loss.
A policy reads that they are to put the claimant in the same position as they were prior to the loss.In some circumstances that is not possible so compensation arguements commence.