Florida Insurance Claims Adjuster License Practice Exam

What is Actual Cash Value (ACV)?

1. The original price of an item.

2. Replacement Cost plus Depreciation.

3. Replacement Cost minus Depreciation.

4. The amount an insured must pay after a claim.

The correct answer is: Replacement Cost minus Depreciation.

ACV is calculated by taking the Replacement Cost of an item and subtracting the Depreciation value. This is done in order to account for any decrease in value that may have occurred over time. Option A is incorrect because the original price may not reflect the current value of the item. Option B is incorrect because while it includes Depreciation, it does not take into account the actual replacement cost. Option D is also incorrect because it does not accurately define what ACV is, which is the value an insured would receive after a claim, not the amount they must pay.