What is actual cash value?

Actual Cash Value is often referred to as just ACV and is defined in our Learning Center as the fair market value of property; technically, replacement cost less depreciation.

Basically ACV is what an insurance company determines your car was worth in the condition it was in before an accident took place and damaged it causing it to be a total loss.

Your car's actual cash value can be determined by comparing your vehicle (same model and like condition) to similar vehicles that are for sell in your area. 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.

When an insurance company is calculating the ACV of your automobile they may used the above methods as well as use a computerized evaluation process to assist them in determining the value of your vehicle.

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Insurance companies purchase third party computer systems 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.

An insurance company may also take into account the value of your car as listed by some automobile authorities such as Kelley Blue Book, NADA and Edmunds.

If your car has been declared a total loss by an insurance adjuster you should speak to the adjuster to find out how they will calculate actual cash value for your car. If you disagree with the value placed on your automobile normally you can negotiate some with the claims adjuster however you will need to bring proof, from a local car dealer, etc, that shows that your vehicle was worth more than the ACV settlement offer the insurance company has offered.