Define 'actual cash value' (ACV) in the context of insurance claims.

'Actual cash value' (ACV) in the context of insurance claims refers specifically to the value of the covered property at the time of loss, incorporating depreciation into the calculation. This means that ACV reflects what the property is worth just prior to it being damaged or destroyed, taking into account age, wear and tear, and any other factors that might diminish its value over time.

When an insured property is evaluated for claims, the insurance company assesses the property's condition and its depreciated value to determine how much compensation the policyholder should receive. This concept contrasts with replacement cost, which would cover the total costs required to replace the property with a new equivalent without considering depreciation.

In contrast, the other options provided do not accurately describe ACV. The total replacement cost does not factor in depreciation, while the amount owed by the insured to the insurer is unrelated to property value. The estimated market value may reflect what the property could sell for but does not necessarily account for the specific conditions influencing that value at the time of a loss. Therefore, the most accurate definition in the context of insurance claims is the one that identifies the value of the property at the time of loss, considering depreciation.