What does "actual cash value" generally mean in property insurance?

Actual cash value (ACV) in property insurance refers to the concept of determining the value of property by taking the replacement cost and subtracting depreciation. This valuation method reflects the current worth of an item considering its age and condition at the time of loss.

This approach acknowledges that even if the replacement cost of an item is high, its value may be diminished due to wear and tear over time. Thus, it provides a more accurate representation of what the property is worth at the moment an insured event occurs.

The other options provided do not correctly encompass the definition of ACV. The original purchase price does not account for depreciation and could misrepresent the item's current value. Market value, while it reflects how much comparable properties might sell for, is not the same as ACV. Lastly, estimating the cost to rebuild addresses potential future expenses rather than the current value of the property as it stands at the time of loss.