What term describes the payment made by the insurer based on the appraised value before a loss?

The term that accurately describes the payment made by the insurer based on the appraised value before a loss is known as Actual Cash Value (ACV). This concept refers to the method of valuing insured property, which takes into account the replacement cost of the property minus depreciation. In practice, if an insured item is damaged or destroyed, the insurer will evaluate its worth before the loss occurred, consider wear and tear, and then pay the insured the determined ACV amount.

This approach is designed to provide a fair compensation that reflects the current value of the property, as opposed to simply covering the cost of replacing the item with a new one at today's prices. Understanding ACV is crucial for both insurers and policyholders because it often impacts the amount of coverage needed and the calculations made during the claims process.