Under a personal auto policy, what is the term for payment based on actual cash value?

The term that refers to payment based on actual cash value is indeed best identified as depreciated cost. In the context of a personal auto policy, actual cash value (ACV) is calculated by taking the replacement cost of the vehicle and subtracting depreciation, which reflects the loss of value due to factors such as wear and tear, age, and mileage. This method ensures that the policyholder receives an amount that fairly represents the vehicle's current market value at the time of loss, rather than a new replacement value.

In comparison, the other terms do not accurately represent the concept of payment based on actual cash value. Substitute value generally refers to the cost of renting a comparable vehicle while repairs are being made. Restoration cost would imply the expense to repair or restore the vehicle to its pre-loss condition, which does not account for depreciation. Replacement value refers to the cost to replace the damaged item with a new one of similar kind and quality, without considering depreciation, and is different from how actual cash value is calculated.