Actual cash value means replacement cost less depreciation. An insurance company determines the worth of the car after accounting for the depreciation and what we get is Actual Cash Value (ACV). This is the amount of money your insurance company will pay out if it is stolen or totalled after they’ve subtracted your deductible, which is required with a comprehensive or collision claim. It means the value of your car as determined by your car insurance company considering the market value of the vehicle. Actual cash value is different from replacement cost coverage, which covers the full cost of replacing the insured item in the case of tragedy.

How is it estimated?

In this scenario, the insurance company will pay you the car’s market value minus any applicable deductibles. Your insurance carrier will look at several different factors to calculate the amount of depreciation that has occurred. These factors include:

  • Pre-loss condition
  • Mileage
  • Add-ons and modifications
  • Recent sales prices for similar cars in the area
  • Salvage value
  • The age of the vehicle
  • Features and options on the car