How do we determine the Actual Cash Value (ACV) value of your luggage?

What is Actual Cash Value?

Actual cash value, or ACV, is the way airlines typically use to valuate damaged luggage claims (and to reimburse you after they approve a claim). Meaning, when your luggage is damaged, airlines will calculate the luggage’s actual cash value when determining how much they’ll pay you for it.

Airlines calculate ACV by:

1.Figuring what was the original value of your damaged luggage, when you bought it (aka the original purchase price)

2.Deducting the loss in value over time due to age, wear, and tear (depreciation)

The equation for ACV looks like this: Original purchase price - Depreciation = Actual Cash Value

So, say your luggage is damaged. You originally bought it for € 100.00, and it was 5 years into a 10 year life span (50% depreciation means € 50.00). The actual cash value of your luggage would be € 50.00.

In other words, ACV is the amount that someone would reasonably pay for your luggage today, assuming the incident had not happened.

How depreciation is determined

Depreciation is a bit trickier, because even if you’ve kept your luggage in mint condition, it’s still aged. Unlike wine (that gets better over time) luggage goes down in value over time.

Why’s that?

Think about buying a new car - the minute you drive off the lot, it has lost value.

Airlines determine depreciation as a factor of “lifespan”, which is basically how long luggage tends to last before it stops working or breaks.

Bottom line: When you buy luggage, it gets old, and loses its value. That’s depreciation.

Here’s the equation for depreciation: Original purchase price x Percentage Lifespan Used = Depreciation

How is actual cash value determined by airlines?

Say you bought a luggage 5 years ago for € 500.00, and it is damaged beyond repair. You submit a claim to the airline.

How will the airlines calculate the ACV of your luggage?

1.You originally bought the luggage for € 500.00? That’s your original purchase price.

2. If it was damaged five years into its 10-year lifespan, that means it depreciated by € 250.00 (50% of € 500.00).

3. Last up, the calculation: € 500.00 (original purchase price) - 250.00 (depreciation) = € 250.00 (actual cash value).

Claims, actual cash value and depreciation

So, this is how all airlines determine the actual cash value, right? This is how much you’ll receive from your airline when a claim is approved, right?

Well, not exactly.

There’s one last thing to take into account: Not all airlines calculate the depreciation (the life span of your luggage) the same way. Some airlines assume 10 year life span for a luggage, others assume 8 or 5 years. Different airlines may have different policies.