Actual cash value
The value of the property on the day of loss, equal to replacement cost less depreciation, the default settlement basis of all property insurance.
Article L. 121-1 of the French Insurance Code caps the indemnity at the value of the property at the time of loss, without saying how to measure it; practice answered with actual cash value. It is the default settlement basis of property insurance: what replacing the item as new would cost, less depreciation. It is often confused with two neighbors. Market value is a resale price, what the item would fetch as it stands; for a specialized asset with no secondhand market, it can be far below actual cash value. Agreed value is settled in advance between the parties and is no longer open to argument at the time of loss; it is reserved for assets where a joint expert appraisal would be impractical. The settlement basis is the first thing to read in a policy and the last thing policyholders check. Yet on an older asset it alone sets the order of magnitude of the indemnity. It gives quantifiable content to the indemnity principle, which forbids enrichment but does not say how to measure what was lost.
France's total loss vehicle procedure, created by the act of January 18, 1985, compares the cost of repairs with the replacement value set by an expert. Above it, the vehicle is taken off the road and the owner is paid actual cash value, not the purchase price. That is how a seven-year-old car repairable for 6,000 euros can be written off and settled for less.
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