Which of the following describes "actual cash value" insurance?

"Actual cash value" in insurance is defined as the value of property at the time of loss, reflecting the property's replacement cost minus depreciation. This means that when a claim is settled, the insurer will consider how much it would cost to replace the item with a new one while taking into account any reduction in value due to age, wear and tear, or obsolescence.

Using this definition, the replacement cost figure represents the amount needed to replace the property with a similar item at current prices. However, since the item has already depreciated, this value is adjusted downward to accurately reflect the actual cash value, which provides a fair assessment of worth at the time of the claim.

In contrast, the other options do not represent the concept of actual cash value accurately. The market value of the property reflects what someone might pay for it in the open market, which could be influenced by factors unrelated to replacement costs. The cost of repairs needed simply addresses fixing the existing property without providing a value assessment, and the sum insured stated on the policy refers to the maximum amount an insurer will pay, which may not align with actual cash value principles.