How is actual cash value calculated according to administrative rule 919?

Actual cash value (ACV) is calculated according to administrative rule 919 as the replacement cost of an item at the time of loss minus depreciation. This approach reflects the true economic value of an item by taking into account both its replacement cost and the wear-and-tear or deterioration that has occurred over time. Depreciation is deducted from the replacement cost to arrive at a figure that more accurately represents the value of an asset just before the loss occurred.

Using this method ensures that the insurance payout is fair and reflects the current value of the property in question, rather than simply the cost to replace it with new items. This is significant because it acknowledges that items lose value as they age and are used, which is a critical factor in assessing claims accurately in the public adjusting process.

The other options do not align with this definition. For instance, estimating cost of repairs without depreciation doesn't account for the item’s present reduced value, while market value at the time of the claim may not reflect the actual replacement costs or necessary adjustments for specific situations. Replacing with new items disregards the reality of depreciation, which is fundamental in determining the actual cash value.