Which of the following describes actual cash value?

Actual cash value (ACV) refers to the concept used in insurance to determine the worth of an asset at the time of loss. This value is calculated by taking the current replacement cost of the property and subtracting depreciation. Depreciation accounts for wear and tear, market fluctuations, and other factors affecting an asset's value over time.

In the context of the available choices, option C accurately captures this definition by specifying the method of calculation involved in determining actual cash value. It recognizes that to reach the ACV, one must consider how much it would cost to replace the item minus the depreciation that has occurred since it was last purchased or since it was new. This makes ACV a fairer assessment of the property’s value to reflect its condition at the time of the loss.

Other choices do not align with the correct definition of actual cash value. For instance, stating that the value is the current replacement cost with no deductions overlooks the essential element of depreciation. Similarly, defining it based solely on market price ignores factors like condition and age of the property. Finally, using the original purchase price only fails to consider what the property’s value would be today, factoring in depreciation or changes in the market. Thus, the choice that accurately reflects the calculation