Actual Cash Value: How Auto Insurance Companies Determine the Value of Your Damaged Car

If you check your policy, you will see that when your vehicle is damaged, you are entitled to the cost of repairs.  If, however, it would either cost more to repair the car than its market value, or it is a fairly close call, then the company owes you the “actual cash value” (ACV) of the car, not the replacement cost.  (See below)  And if you choose to keep the car and repair it, the insurance company will deduct the salvage value of the vehicle from the ACV when they pay you, because they could have sold the salvage to a salvage yard for parts had they taken it from you. Keep in mind that the ACV less the salvage value (and possibly less your deductible, as well), is often not enough to fix the car.  Sometimes it is best to take the money and run; i.e., turn over the car to the insurer for the ACV less the deductible.

The ACV is arrived at by different methods, but many insurance companies use the Kelley Blue Book to find a value for the same year, make and model of car, and add on for additional features or deduct for the lack thereof. If, for example, your car had a stereo with 12 speakers, and the car listed in the Kelley Blue Book has only the factory-installed radio with 4 speakers, they would add on a few hundred for the upgrade.  If you disagree with the value the insurer has come up with, you can dispute it by providing them with documentation to support what you believe the car is worth.  Find cars of the same year, make and model with similar features for sale on the Internet or in the newspaper, being sold by dealers or individuals for more money.  If the insurance company still won’t budge, utilize the Appraisal Clause in your policy, which usually provides that you and the insurer each hire your own appraiser to determine the value of the vehicle.  If the two appraisers agree, it’s settled. If not, a third (referee) appraiser is hired to help reach the decision.