What is the term for the value of insured property before a loss occurs?

The term that refers to the value of insured property before a loss occurs is known as Actual Cash Value (ACV). This concept is essential in insurance, particularly in property and casualty policies. ACV is defined as the replacement cost of the property minus depreciation. It reflects the property's present value in the market at a given point in time, factoring in any decline in value due to age or wear and tear.

Understanding ACV helps policyholders grasp how their insurance coverage is calculated and what they can expect in the event of a claim. This is because, in the case of damage or loss, insurers typically aim to reimburse the policyholder based on the ACV rather than the original purchase price or replacement cost.