What is an actual cash value (ACV) policy?

An ACV policy pays for loss to items (if the loss is covered by the policy) based on the value of the item at the time of loss. If your television was destroyed by fire, payment would be based on the age of the television; you would not receive payment based on what it is worth as a new television. The good news is, on most policies, you can purchase a coverage that will pay for an item of contents (such as the television) based on the new value – although the deductible will apply.