Loss settlement that takes a deduction for depreciation is known as?

The term that best fits the description of loss settlement that takes a deduction for depreciation is known as Actual Cash Value (ACV). ACV represents the current worth of an item considering both its replacement cost and the depreciation that has occurred since its purchase. This method essentially calculates value by subtracting depreciation from the replacement cost, which accounts for wear and tear, age, and other factors affecting the item's current value.

This approach is often used in property insurance policies to determine the amount an insurer will pay for a loss. For example, if a household appliance was purchased for $1,000 but has depreciated due to use and age, the insurance settlement might reflect that loss based on its reduced value, rather than the amount to replace it new.

In contrast, alternatives like Replacement Cost Value would provide the amount needed to replace the item without considering depreciation, while Market Value generally pertains to what a buyer might be willing to pay for the item in its current state. Stated Amount is a predetermined value placed on the property that may not reflect actual cash value or depreciation practices.