Estimating and reserves
ACV & Depreciation Worksheet Template & Example
Last updated 2026-08-03
Actual cash value is not one thing. It is at least three, and which one applies depends on the state the risk sits in and sometimes on the policy wording as well. Replacement cost less depreciation is the common formulation, several states define it by statute, and a number of states instead apply the broad evidence rule, under which a fact-finder may weigh any evidence bearing on value rather than working a single formula. A worksheet that quietly assumes one of those is a worksheet that produces a defensible number in some states and an indefensible one in others.
So this document does two things a blank grid cannot. It records the inputs behind every depreciation figure — age, expected life, condition and the source of each — rather than only the percentage, and it records which valuation basis the file used and why. The second part matters because depreciation disputes are almost never about arithmetic. They are about whether a component should have been depreciated at all, and about where the age number came from.
The worked example below prices a fictional water loss line by line and depreciates only three of nineteen items. It also leaves one input unresolved: the age of the paint rests on the insured's recollection with no document behind it, and the worksheet says so rather than presenting 30% as though it were measured.
Jurisdiction
Written primarily against US first-party property practice. Claim handling is regulated state by state — acknowledgment and response deadlines, prompt-payment requirements, adjuster licensing and unfair claims practices standards all differ — and the policy actually issued governs the claim. Where a page cites a statute, model act or regulation, confirm what applies in the state where the loss occurred. Outside the US, treat the structure as transferable and the legal references as not.
ACV template
Free Word download, no email required. Or open it in Professional Drafter — it lands in your template library, ready to draft against.
When to use this document
- Any partial loss where the first payment is on an actual cash value basis and recoverable depreciation is being held.
- When an insured or a public adjuster has questioned a depreciation figure, and the file needs to show the inputs rather than the result.
- When the estimate contains a mix of components with genuinely different lives — finishes, mechanical items, roofing — and a single blanket percentage would be indefensible.
Worked example
Fictional scenario: the Harbour Lane water loss, claim PC-2026-11482, building estimate only. Nineteen lines, of which three carry depreciation and one is depreciated at zero for a reason that ties back to the subrogation file. The age input behind the largest depreciation figure is undocumented, and the worksheet records that rather than hiding it.
Claim identification and valuation basis
Claim PC-2026-11482. Insured D. Okonjo, 118 Harbour Lane. Date of loss reported 14 July 2026. Policy HO-4471903, term 1 March 2026 to 1 March 2027. Estimate prepared by R. Calloway 20 July 2026 following inspection on 18 July.
Basis applied: replacement cost less physical depreciation, per the policy's loss settlement wording, with the first payment issued on an actual cash value basis and the difference held as recoverable depreciation under the replacement cost provision.
This worksheet is worked as replacement cost less depreciation because that is what the policy provides and it is the formulation Model 902 §9(B)(1) uses. The model binds nothing on its own; where a state has adopted a definition, that definition governs and this header should carry its citation instead. Where a state applies the broad evidence rule, a straight age-over-life computation is a starting point rather than the answer, and the file should reflect that. The risk state's rule was checked before this sheet was worked; the citation is filed with the coverage summary.
Depreciation method and its limits
Method: straight-line, age over expected life, with condition adjustment applied on one line only and shown separately where used.
Excluded from depreciation on this file:
- Mitigation and drying services, antimicrobial application, content manipulation, cleaning, debris removal, containment, general conditions and moisture verification. These are services performed after the loss; there is no pre-loss component to depreciate.
- Demolition and removal labor.
- Drywall, tape and texture. Treated here as structural finish not normally subject to repair and replacement during the life of the structure.
- Overhead and profit, and sales tax. Carried on this estimate and not depreciated. Treatment of both varies by carrier and by state and is genuinely contested. This records what the file did; do not read it as a rule.
One restriction worth naming because it is jurisdictional rather than customary: California provides at Ins. Code §2051(b) that on a partial loss to a structure the depreciation deduction applies only to components normally subject to repair and replacement during the useful life of that structure. That is a statutory restriction in that state and not a general principle. Other states define actual cash value differently or leave it to case law, and several apply the broad evidence rule instead. If the risk here sat in California, the drywall treatment on line 6 is the one that would need to be worked against that restriction rather than against the file's usual practice, and the reasoning would go on the sheet.
Line-item schedule
Line | Description | RCV | Age | Life | Dep % | Dep $ | ACV
1 | Emergency mitigation and drying, 6 air movers and 2 LGR dehumidifiers, 4 days with daily monitoring | 3,940.00 | n/a | n/a | 0 | 0.00 | 3,940.00
2 | Antimicrobial application, 310 SF | 285.00 | n/a | n/a | 0 | 0.00 | 285.00
3 | Content manipulation; detach and reset stored goods, hallway closet | 640.00 | n/a | n/a | 0 | 0.00 | 640.00
4 | Remove drywall to 24 inches, 31 LF, and haul | 1,640.00 | n/a | n/a | 0 | 0.00 | 1,640.00
5 | Remove and replace wet batt insulation, 26 LF | 780.00 | n/a | n/a | 0 | 0.00 | 780.00
6 | Hang, tape, float and texture 1/2 inch drywall, 62 SF plus closet returns | 2,610.00 | 21 | 60 | 0 | 0.00 | 2,610.00
7 | Seal and paint patched area, two coats, 310 SF | 1,050.00 | 3 | 10 | 30 | 315.00 | 735.00
8 | Base trim, replace, 31 LF, primed and painted | 930.00 | 3 | 40 | 7.5 | 69.75 | 860.25
9 | Prefinished shelf unit, hallway closet, replace | 135.00 | 12 | 25 | 48 | 64.80 | 70.20
10 | Water heater surround panel, 6 SF, replace | 260.00 | 0.9 | 30 | 0 | 0.00 | 260.00
11 | Clean, dry and seal slab, 310 SF | 890.00 | n/a | n/a | 0 | 0.00 | 890.00
12 | Detach and reset baseboard electrical, 6 outlets and 2 switches | 410.00 | n/a | n/a | 0 | 0.00 | 410.00
13 | Final cleaning, 310 SF | 340.00 | n/a | n/a | 0 | 0.00 | 340.00
14 | Debris removal and container | 480.00 | n/a | n/a | 0 | 0.00 | 480.00
15 | Moisture verification and post-remediation documentation, 2 visits | 420.00 | n/a | n/a | 0 | 0.00 | 420.00
16 | Temporary containment and floor protection | 380.00 | n/a | n/a | 0 | 0.00 | 380.00
17 | General conditions and supervision | 650.00 | n/a | n/a | 0 | 0.00 | 650.00
18 | Sales tax on materials | 335.00 | n/a | n/a | 0 | 0.00 | 335.00
19 | Contractor overhead and profit, qualifying trades | 2,165.00 | n/a | n/a | 0 | 0.00 | 2,165.00
Sources of age. Line 6: county records show the dwelling completed 2005, so 21 years, well inside a 60-year life and depreciated at nil on the method above in any event. Line 7: insured states the hallway and living room were repainted in spring 2023; no invoice produced. Line 8: base trim replaced at the same time on the insured's account, same source. Line 9: shelf unit described by the insured as original to his occupancy in 2014; observation is consistent with that. Line 10: the surround was installed with the water heater by Feldstrom Plumbing under invoice 20941 dated 3 August 2025, eleven months before the loss and inside the file's one-year nil-depreciation threshold. That invoice is in the file for subrogation purposes and is the only documented age input on this sheet.
Summary and reconciliation
- Total RCV:
- $18,340.00
- Total depreciation, column sum of lines 7, 8 and 9:
- $449.55
- Depreciation as carried:
- $450.00
- Total ACV:
- $17,890.00
- Less deductible, $2,500 all-peril, applied once to this occurrence:
- $2,500.00
- Net payable on an actual cash value basis:
- $15,390.00
The forty-five cents. The ACV column above sums to $17,890.45. Depreciation is rounded up to $450.00 at this line, so the ACV is carried at $17,890.00 and the first payment is forty-five cents lower than the unrounded column would give. The whole $450 is held as recoverable depreciation and is released on the terms in the next section, so nothing is lost by it, but it is written out rather than absorbed because a summary that silently disagrees with its own column by any amount invites the reader to re-check every other figure on the sheet.
Reconciliation. The $18,340 RCV and $17,890 ACV figures match the estimate of 20 July line for line and match the figures carried in the reserve rationale memo of 21 July. Building payment issued 24 July 2026, check 0891446, $15,390.00. Contents are not included on this sheet and are valued separately on the contents inventory; the reserve memo carries a placeholder for them.
Recoverable depreciation and what releases it
Held as recoverable depreciation: $450.00.
Released on documentation that the repairs described in lines 7, 8 and 9 have actually been completed — a contractor's final invoice showing those line items, or paid receipts if the insured completes the work himself. The policy's replacement cost provision states a period within which the work must be completed for the replacement cost basis to apply; that period and its start date were quoted to the insured verbatim in the letter of 24 July rather than paraphrased, and the letter is in the file.
The insured was told on the telephone on 24 July, and in writing the same day, that $450 is being withheld, what it is for, and exactly what releases it. Recorded here because withheld depreciation an insured never knew about is the most common reason it is never claimed.
Assumptions, disputed inputs and open items
1. The paint age is undocumented. The 30% on line 7 is the largest single depreciation figure on this sheet and it rests on the insured's recollection that the area was repainted in spring 2023. No invoice was produced and none is likely to exist; he described the work as done by a relative. Three years on a ten-year life is a reasonable reading of that statement, but it is a statement and not a record, and it is presented here as one. If a document surfaces showing an earlier date, the figure increases; if the work was in fact more recent, it decreases. Either way the arithmetic is not the issue — the input is.
2. The base trim age on line 8 comes from the same conversation and has the same weakness. Its effect is small, $69.75, and it is noted for completeness rather than because it is likely to be contested.
3. No competing valuation has been advanced. The insured has not retained a public adjuster and has not disputed any figure on this sheet as at the date of writing. If that changes, the competing figure and its stated basis go in this section next to mine rather than replacing it.
4. Open: nothing on this sheet is contingent on the duration question recorded elsewhere in the file. Duration bears on whether the loss is covered at all, not on what the repair costs, and the two must not be blended. This worksheet answers only the second question.
Section-by-section guide
What each section is for, what a good one contains, and where they typically go wrong.
1.Claim identification and valuation basis
State, before any arithmetic, which basis the worksheet is worked on and where that comes from: the policy's own valuation wording, and the state's rule if the state has one. Model 902 §9(B)(1) frames actual cash value, on residential fire and extended coverage written on an ACV basis, as replacement cost at the time of loss less depreciation, and contemplates that on the insured's request the insurer provides a copy of the claim file worksheets detailing the deductions for depreciation. It binds nobody until a state adopts it, so name the adopting citation if your state has one and say plainly if it does not.
2.Depreciation method and its limits
Say which method you used and what you excluded from it. Straight-line by age over expected life is the usual approach; condition adjustment on top of it is common and should be identified separately when used. This is also where any state-specific restriction is recorded. California, for example, provides at Ins. Code §2051(b) that on a partial loss to a structure the depreciation deduction applies only to components normally subject to repair and replacement during the useful life of that structure. Whether labor, overhead or non-material components are depreciated varies by carrier and by state and is genuinely contested — record what this file did and do not present the practice as a rule.
3.Line-item schedule
One row per estimate line, in estimate order, so the two documents reconcile without cross-referencing. The columns that make the sheet defensible are age, expected life and source of age — a percentage with no age behind it is an assertion. Where a line carries no depreciation, still give it a row and a reason, because a blank row reads as an omission and a reason reads as a decision.
4.Summary and reconciliation
Totals RCV, total depreciation, total ACV, then the deductible and the net figure being paid. The reconciliation matters more than it looks: the ACV total here must equal the ACV figure on the estimate, on the reserve memo and on the payment, and a mismatch between any two of those is the single most common thing an insured's representative finds first.
5.Recoverable depreciation and what releases it
If the policy provides replacement cost and the withheld depreciation is recoverable, state the amount, what documentation releases it, and any time limit the policy sets for completing the work. Insureds most often lose recoverable depreciation by not knowing it exists, and the second most common way is by missing a period stated in a policy provision nobody drew to their attention.
6.Assumptions, disputed inputs and open items
Every input you could not document goes here with its source named. An age taken from the insured's recollection is a legitimate input; presenting it as though it were taken from a permit is not. If a figure is already in dispute, record the competing input and where it came from, so the file shows the disagreement rather than only your side of it.
Common mistakes
The failure modes that show up most often when this document is reviewed later.
Applying one blanket percentage across the whole estimate.
It produces a number nobody can defend line by line, and it is the first thing a public adjuster attacks because a single challenged component collapses the whole figure rather than one row of it.
Recording the percentage but not the age, the life or where the age came from.
The dispute is almost always about the input, not the arithmetic. A worksheet showing 30% with nothing behind it cannot be defended; the same 30% with 'insured states repainted spring 2023, no invoice produced' can at least be discussed honestly.
Writing that a model regulation requires the worksheet to be produced.
NAIC models bind nobody until a state adopts them. The accurate sentence names the model provision, then names the adopting state citation — or says the state has none and the policy wording governs. Overstating the authority is the error that gets a whole page discounted.
Assuming the depreciation rules of the state you usually work in.
Actual cash value genuinely differs across states — statutory definitions in some, the broad evidence rule in others, and a California-specific restriction on which components may be depreciated on a partial structural loss. A method that is standard in one state can be indefensible three states over.
Withholding recoverable depreciation without telling the insured, in writing, what releases it.
The money then sits unclaimed, and when it surfaces later it surfaces as a complaint rather than as a supplement. It also looks, on a file review, exactly like what it is: an amount the insured was never given a fair chance to recover.
Letting the worksheet's ACV total drift from the estimate, the reserve and the payment.
Four documents carrying three different numbers is the fastest way to lose an argument you would otherwise have won, because the reader stops evaluating the depreciation and starts evaluating the file.
Questions
- Is actual cash value always replacement cost less depreciation?
- No, and this is the single most consequential thing to get right. Some states define it by statute, some leave it to case law, and a number apply the broad evidence rule, under which a fact-finder weighs any evidence bearing on value rather than working one formula. California adds a restriction of its own on partial structural losses. Check your risk state's rule before you work the sheet, and record on the sheet which rule you applied.
- Should labor be depreciated?
- It is contested, the answer differs by state and by carrier, and this is not the place to be told what the answer is. What the worksheet should do is state clearly what it did — depreciated or not — so that a reviewer can see the choice instead of reverse-engineering it from a total.
- Does the insured get to see the depreciation worksheet?
- Model 902 §9(B)(1) contemplates that on the insured's request the insurer provides a copy of the claim file worksheets detailing any and all deductions for depreciation, and states that have adopted the model carry that expectation in their own regulation. The model itself binds nobody, so whether it applies to your file depends on your risk state's adopted text. Treat the worksheet as a document that will be read by the insured, because in adopting states it may well be, and a sheet written on that assumption is a better sheet regardless.
- What if the insured disputes the age of a component?
- Record their figure next to yours with its stated basis, rather than replacing yours or ignoring theirs. A worksheet that shows two competing inputs and where each came from is a document that survives review. One that shows only the adjuster's input, with no trace of the disagreement, does not.
The blank template
Exactly what is in the Word download, so you can see the structure before deciding whether you want it.
Claim identification and valuation basis
Depreciation method and its limits
Line-item schedule
- Estimate line number, matching the estimate exactly
- Age, and where the age came from — permit, invoice, insured's statement, observation
- Expected life and the schedule it comes from
- Reason for any line depreciated at 0%
Summary and reconciliation
Recoverable depreciation and what releases it
Assumptions, disputed inputs and open items
Download this template
Free Word download, no email required. Or open it in Professional Drafter — it lands in your template library, ready to draft against.
Sources
- Cal. Insurance Code §2051 — actual cash value
- NAIC — Unfair Property/Casualty Claims Settlement Practices Model Regulation (Model 902, 1991 amendment, July 1997 print)
- NAIC — Market Conduct Record Retention and Production Model Regulation (Model 910, January 2004)
- Cal. Insurance Code §2071 — standard form fire policy
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This page is a documentation aid, not legal advice and not a coverage opinion. Claim-handling requirements vary by state and by policy wording, and a template cannot tell you what your file requires. The worked example describes a fictional loss.