Greene-Niesen Insurance Agency, Inc. of Middleton
Greene-Niesen Insurance Agency, Inc. of Middleton
Greene-Niesen Insurance Agency, Inc. of Middleton
Greene-Niesen Insurance Agency, Inc. of Middleton
address 6810 University Ave.
Middleton, WI 53562
Car Insurance Home Insurance Health Insurance Life Insurance Business Insurance Renters Insurance
Car Insurance Home Insurance Health Insurance Life Insurance Business Insurance Renters Insurance
Car Insurance Home Insurance Health Insurance
Life Insurance Business Insurance Renters Insurance

Actual Cash Value

Actual Cash Value is a method to value an insured property. It is calculated by deducting depreciation from the replacement cost. 

ACV= Replacement Cost-Depreciation

Replacement Cost: "Current market price of a particular product or property". For example, a building was priced at $50000 5 years ago and currently it is priced at $55000. Hence, the replacement cost is $55000.

Depreciation: Decrease in value of property due to its use or obsolescence.

There are two methods to calculate depreciation.

  • Straightline Method-   Purchase price of asset - Scrap value (Recoverable value) / Expected useful life of the asset (How long an asset can benefit the company)
  • 2- Reducing Balance Method- In this method a fixed percentage of depreciation is taken and charged to the Net Book Value (NBV= Purchase Price of Asset-Accumulated Depreciation or Combined Previous Depreciation) of the asset.

Depreciation=Net Book Value (NBV) * Depreciation Rate

Example:

NBV= $1000
Depreciation Rate= 10%

Depreciation= $1000 * 10%

Depreciation= $100