What is Actual Cash Value?

Legal Definition
In the property and casualty insurance industry, Actual Cash Value (ACV) is a method of valuing insured property, or the value computed by that method.

Actual Cash Value (ACV) is not equal to replacement cost value (RCV). ACV is computed by subtracting depreciation from replacement cost. The depreciation is usually calculated by establishing a useful life of the item determining what percentage of that life remains. This percentage multiplied by the replacement cost equals the ACV.

As an example: a man purchased a television set for $2,000 five years ago and it was destroyed in a hurricane. His insurance company says that all televisions have a useful life of 10 years. A similar television today costs $2,500. The destroyed television had 50% (5 years) of its life remaining. The ACV equals $2,500 (replacement cost) times 50% (useful life remaining) or $1,250.

This concept is different from the book value used by accountants in financial statements or for tax purposes. Accountants use the purchase price and subtract the accumulated depreciation in order to value the item on a balance sheet. ACV uses the current replacement cost of a new item.
-- Wikipedia
Legal Definition
The fair or reasonable cash price for which the property could be sold in the market, in the ordinary course of business, and not at forced sale; the price it will bring in a fair market after reasonable efforts to find a purchaser who will give the highest price. Birmingham F. Ins. Co. v. Pulver, 126 111. 329, 18 N. E. 804, 9 Am. St. Rep. 598; Mack v. Lancashire Ins. Co. (C. C.) 4 Fed. 59; Morgan's L. & T. R. S. S. Co., v. Board of Reviewers, 41 La. Ann. 1166, 3 South. 507.
-- Black's Law Dictionary