You got it right on your second guess. ACV is a car insurance term and stands for Actual Cash Value.
The technical definition of actual cash value is the replacement cost of property minus depreciation or with car insurance it is thought of as the fair market value of your vehicle. An easier to understand definition for ACV is the worth of your car, in the condition it was in (door dings, rust, dirty interior and all) the moment before your car was in an accident.
If you have been in a car accident where your vehicle was harmed and you have made a claim for its damages, the auto insurance company working your claim will determine the ACV for your vehicle.
The car insurance company calculates the value of your car to see if they will pay to fix it or if it is more economical to instead find your car to be a total loss. If the ACV of your car is low, it is more likely to be declared a total loss, because when repairs cost 75% or more of a vehicle's value most insurers will not pay to fix it.
Insurance companies each have their own internal guidelines about how to calculate your car's ACV but in general they will use at least some of the following ways:
- Information from local dealers on how much the vehicle would have sold for.
- Average the cost of comparable cars (same make, model, year, condition) advertised in your area within the past 30 days.
- Valuation guides such as NADA and Kelly Blue Book.
- Computerized evaluation software.
Every automobile insurance company has their own internal rules that are used to determine actual cash value. Determining the ACV is subjective and there is no standard way that all insurers use.
If your car was declared a total loss and the car insurance company working your claim (your own for a Collision claim or the at-fault party's for a Property Damage Liability claim) has told you they are figuring out your vehicle's ACV for a settlement offer, then ask your adjuster what methods they are using.
If your agent is unable to explain to you about ACV or otherwise fulfill your car insurance needs, contact a CarInsurance.com agent who can explain not only insurance terms and claim procedures but and also tell you how they can get you affordable auto insurance.