Which of the following statements regarding actual cash value is FALSE?

The statement that actual cash value is always most beneficial to a policyholder is indeed false. Actual cash value (ACV) represents the replacement cost of an item minus depreciation. This means that as items age or wear down, their ACV decreases, which can lead to a lower compensation amount in the event of a claim for damages or loss.

In contrast, replacement cost valuation does not factor in depreciation and instead covers the cost to replace the item with a new one of like kind and quality, which is generally more beneficial to the policyholder. Thus, assuming that ACV is always the best option for the policyholder is misleading, as it often yields less financial recovery compared to replacement cost coverage.

The other statements accurately reflect key aspects of ACV. For instance, it does include depreciation, indicating that older items will have lower values. Moreover, it typically reflects the market value of an item at the time of loss, and replacement cost values tend to exceed ACV, which emphasizes the importance of understanding the implications of the type of coverage chosen in an insurance policy.