Actual Cash Value
Actual Cash Value (ACV) refers to the value of a damaged vehicle, or a vehicle trade in. In the case of a damaged vehicle, the ACV is used to determine if the vehicle is totaled or eligible for repair when you file an insurance claim after an accident.
While there is no single method for calculating ACV, the following factors are typically taken into account:
- Auto book value.
- Fair market value.
- Replacement cost.
Auto Book Value
The auto book value refers to the value of the vehicle according to Kelley Blue Book, Black Book, or the National Automobile Dealers Association (NADA). This is typically the first resource insurance companies consult when calculating the ACV of a damaged vehicle.
Fair Market Value
Fair market value refers to the wholesale or retail value of the damaged vehicle. The fair market value is often lower than the vehicle’s book value, which in turn affects the ACV.
If the car is new or relatively new, the insurance company might consider the cost of replacing the damaged vehicle with a new vehicle of the same model or a similar model. Check with your insurance provider for their age limits and requirements.
State Specific Requirements
The actual requirements for calculating ACV vary by state. If you have recently been involved in a car accident, contact your state Insurance Department for information specific to your state. Knowing your state requirements for calculating ACV can help you to avoid being taking advantage of by your insurance company.
Calculating Your ACV
You can calculate your own ACV by consulting the Kelley Blue Book, Black Book, or NADA. You can also contact a car dealer for information regarding a trade-in, in which case, you should request all quotes recorded in writing. That way, if you feel that your insurance provider is offering an unfair sum, you have documentation to support this claim.Find Your
Local DMV Office