Question: How is the "actual cash value" (ACV) determined?
Answer: Your vehicle's actual cash value is determined by comparing your vehicle's condition to similar vehicles. This may include input from local auto dealers, private parties or recent sales, which the adjusters use in their valuation. Condition, equipment and mileage differences are also taken into consideration. Actual cash value is most commonly used to determine the payout from a totaled car.
Your insurance company may use a computerized evaluation process to assist them in determining the value of your vehicle. Insurance companies purchase third party computer systems (such as CCC) that help them estimate costs in automotive claims and collision repairs. Third party software supplies insurers with software and a database that helps determine the value of a vehicle based upon automating the claims process. These systems have databases and systems that contain benchmarking tools to find the true value of a vehicle from repair shops and dealers.
When a carrier determines your ACV you can ask them what they used to determine this value. The purpose of reimbursing for your actual cash value is to pay you back and make you whole, so if the value determined seems unfair, you should dispute it with your claims adjuster and insurance company.
Classic and restored cars
For classic and restored vehicles, you typically do not have an auto insurance policy that pays actual cash value if the car is totaled. When a typical policy covers physical damage, it won't insure vehicles over a certain age (usually 20 years, sometimes fewer). For that reason, you can purchase a "stated value policy" for classic or restored vehicles. You and your agent determine the value that you want to be covered and your premium is based upon that. When a loss occurs, you are covered up to that stated value.