1. What is Actual Cash Value (ACV)?

Actual Cash Value (ACV) is the amount equal to the replacement cost minus depreciation of a damaged or stolen property at the time of the loss. It represents the current market value of the item, considering its age and condition.

2. How Does the Calculator Work?

The calculator uses the ACV formula:

Where:

• \( Sum Insured \) — The insured amount for the item (AUD)
• \( Depreciation \) — The calculated depreciation based on age and condition (AUD)

Explanation: The equation calculates the current value of an insured item by subtracting its depreciation from the original sum insured.

3. Importance of ACV Calculation

Details: ACV is crucial for determining insurance payouts in Australia. It helps policyholders understand what they can expect to receive when making a claim for damaged, destroyed, or stolen property.

4. Using the Calculator

Tips: Enter the sum insured amount in AUD and the calculated depreciation amount in AUD. Both values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: How is depreciation calculated in Australia?
A: Depreciation is typically calculated based on the item's age, expected lifespan, and condition. Many insurers use standard depreciation tables.

Q2: What's the difference between ACV and replacement cost?
A: Replacement cost covers what it would take to buy a new equivalent item, while ACV factors in depreciation based on the item's age and condition.

Q3: Do all insurance policies in Australia use ACV?
A: No, some policies offer replacement cost coverage. Always check your policy details to understand how claims will be calculated.

Q4: How can I dispute an ACV calculation?
A: You can provide evidence of the item's condition or get independent valuations. The Australian Financial Complaints Authority (AFCA) can assist with disputes.

Q5: Are there items that don't depreciate?
A: Some items like antiques or collectibles may appreciate in value. Special insurance may be needed for these items.