What does 'actual cash value' refer to in vehicle appraisal?

The term 'actual cash value' in vehicle appraisal specifically refers to the value determined by subtracting depreciation from the replacement cost. This concept captures the notion that a vehicle's value decreases over time due to factors such as wear and tear, age, and market conditions. By calculating the replacement cost — what it would cost to replace the vehicle with a similar one in good condition — and then accounting for depreciation, appraisers arrive at a more accurate reflection of the vehicle’s worth at the time of appraisal.

This approach aligns with insurance practices where 'actual cash value' is often used to settle claims, ensuring that policyholders receive a fair compensation equivalent to their vehicle's current market value after taking depreciation into account. It reflects a realistic assessment of the vehicle's worth considering both its prior value and the effects of depreciation over its lifespan.