What is the term for the cost to replace an item of property at the time of loss, considering depreciation?

The term for the cost to replace an item of property at the time of loss, accounting for depreciation, is known as Actual Cash Value (ACV). ACV represents the value of the property at the time of loss after deducting depreciation, which reflects the decrease in value of the property over time due to factors such as wear and tear, age, or obsolescence. This concept is essential in insurance and property claims, as it helps determine the amount that will be paid out to the insured in the event of a loss.

When considering replacement costs, it’s important to distinguish them from ACV. Replacement cost refers to the current cost to replace the item without depreciation factors considered, which could lead to higher payouts. Market value usually pertains to the price that an item would fetch in the marketplace, which can vary significantly from ACV, whereas depreciated value is not a standard term used in insurance contexts and does not specifically define the value accounting for depreciation as ACV does.