What Is the Actual Cash Value of My Car?
Actual cash value (ACV) is how much your car was worth just before it was totaled in an accident. The ACV will be less than the price you paid for the car.
If your wrecked car costs too much to repair, then the insurance company may offer to pay you your car’s ACV. You can research the car’s price and dispute the ACV payout if you think it’s unfair.
What is actual cash value?
Actual cash value or “ACV” is what it would cost to replace your car new, minus depreciation like mileage and past accidents.
Actual cash value normally comes into play if your car is judged a total loss, meaning it would cost more to repair the car than what it’s worth. In that case, your auto insurer will cut you a check based for the car’s ACV — unless you have additional coverage (See below.)
How do you calculate the actual cash value of a car?
The insurance company will usually have a third party decide the ACV of your car. The price will be based on the car’s age, mileage, make and model, but also on the condition of the car before the accident.
Even if your car wasn’t totaled in an accident, it’s good to have an idea of the actual cash value of your car.
You can start by looking at a car price guide, like Kelley Blue Book, Edmunds or J.D. Power. You can also check a used-car website to see what price cars similar to yours are going for. To get an accurate number, check out our guide to how much your car is worth.
Make sure you take into account any previous accidents or wear and tear that might make the ACV lower than what Kelley Blue Book lists it for.
In some cases, you might be surprised by a lower ACV than you expected. Make sure your insurance payments are much smaller than your ACV — if not, you’ll probably want to shop around for new car insurance or get a cheaper type of insurance coverage.
How to get more than your car’s ACV
If you’re willing to pay a little more for your premium, you can get car insurance coverage that will pay you more than your car’s ACV.
Replacement cost coverage
Replacement cost car insurance pays out whatever it costs to replace your totaled car with the same or similar car, without depreciation factored in. Many car insurance companies offer replacement cost policies, but they cost more than regular ACV car insurance policies.
GAP insurance
Guaranteed asset protection, or “GAP coverage,” guards against a situation where you owe more on the car loan than what the ACV says the car is worth. In this case, the GAP coverage will kick in and pay whatever you still owe after the ACV car insurance payout.
How to dispute your ACV payout
If the ACV payout your insurer offers is not to your liking, you can dispute it — but be prepared to do some homework.
- First, make sure you’re familiar with your car insurance company’s claim dispute process — otherwise the company can deny your request. Contact your insurer to get the details and access its claim dispute form.
- Next, research the prices of cars in your area as similar as possible to your totaled car, using some of the resources mentioned above. Get as close to the same make, model, age and condition as you can.
- Check the car insurance company’s evaluation report of your totaled car for errors, too. If the specs are incorrect, or your insurer left high-performance tires or light upgrades off the report, it can affect the credibility of your dispute.
If you feel you have a strong argument to get your ACV recalculated, you can try to renegotiate the payout. Have all your evidence available to share when you talk with your insurer.
Frequently asked questions
Look in price guides (like Kelley Blue Book or Edmunds) and check advertised prices for used cars similar to yours. If your car was in previous accidents, you’ll need to lower the ACV accordingly. This will only be an estimate of the ACV, and your insurer may have a different number.
If your car can be repaired for less than its ACV, then the insurer will just pay for the repairs. Only if your car is totaled — the repairs would cost more than the car is worth — does the insurer pay you the ACV. But even if you haven’t been in an accident, knowing your ACV is worthwhile, since it can help you decide how much car insurance you need.