Actual Cash Value – A Changing Concept

Summary:  The term “actual cash value” is used in most property forms as well as inland marine forms and auto physical damage forms. Although the term is often not defined in the policy, it is frequently understood to mean “replacement cost minus depreciation.” While that definition remains a part of the idea of actual cash value, the definition used by many courts has expanded over the years. The definition most often used today incorporates what is known as the “broad evidence rule.” This article discusses the changing definition of “actual cash value,” and concludes with a brief synopsis of how the term has been defined in the ISO homeowners and commercial lines policies in the states that now mandate the definition’s inclusion.

Topics Covered:

Three primary tests