How Do You Find the Actual Cash Value (ACV) for Your Car?

Last Updated on March 9, 2020

The actual cash value of your car plays a crucial role in the insurance claim process. After a total loss insurance claim, your insurer will likely reimburse you based on the actual cash value of your vehicle.

Today, we’re explaining how to find the actual cash value for your car.

How Do You Find the Actual Cash Value (ACV) for Your Car?

What is Actual Cash Value?

Actual cash value (ACV) is the amount of money that your vehicle is worth at any specific time.

To calculate ACV, you subtract wear and tear costs (i.e. depreciation) from the original cost of the vehicle.

In other words, ACV is the value of your vehicle based on the price you paid for it minus depreciation.

If your car is a total loss after an accident, then your insurance company will compensate you for the actual cash value of your vehicle. However, that doesn’t mean you’ll be able to buy the exact same vehicle with that check.

When Do Insurance Companies Use Actual Cash Value?

Insurance companies frequently use actual cash value when talking about home insurance or car insurance.

Typically, actual cash value is discussed in total loss situations. If your home or vehicle has experienced significant damage, then it may be declared a total loss. In this case, it would cost more to repair your home or vehicle than it’s worth, which means your insurance company will compensate you based on the actual cash value of your property: you will receive a check for the actual cash value of your home or vehicle.

How to Calculate Actual Cash Value

The formula for actual cash value is straightforward:

Actual Cash Value (ACV) = Original Price – Depreciation

If you paid $20,000 for your car five years ago, for example, and the car has depreciated $8,000 based on wear and tear, then your car has an actual cash value of $12,000. If you get into a total loss accident with your car, then you will receive a check for $12,000 from your insurance company (or less, minus your deductible).

Other Types of Car Insurance Valuation Options

Actual cash value is the most common type of valuation for home and car insurance policies. However, there are three other types of valuations, including:

Stated Value: Stated value car insurance policies insure a vehicle for a certain amount even if the vehicle is worth more. It’s common on classic cars or other vehicles with unique valuations. If your grandpa gave you a $500,000 sportscar, for example, but you can’t afford to insure it for $500,000, then you might buy a stated value insurance policy that states the vehicle’s value at just $50,000, allowing you to have affordable protection against minor damage.

Agreed Value: Agreed value car insurance policies are also common for classic cars. You and your insurance company agree on the value of a specific vehicle. The insurance company agrees to reimburse you for that value in the event of a loss. Depreciation costs and wear-and-tear are not considered: the amount you chose is the agreed value of your vehicle. A classic car in good condition, for example, isn’t likely to lose value as it gets older, which is why agreed value policies work well.

Replacement Cost: Many insurance companies offer replacement cost policies. You can pay extra for a replacement cost policy. With replacement cost car insurance, your insurer compensates you enough money to replace your vehicle completely after an accident. If your vehicle has an actual cash value of $12,000, for example, but it would cost $15,000 to buy that same vehicle in your local area, then your insurer will pay you $15,000 based on your vehicle’s replacement value.

Does Kelly Blue Book Value Affect Determine ACV?

Some vehicle owners are frustrated with a low payout from the insurance company. The insurer may claim your vehicle has an ACV of $12,000, for example, when the Kelly Blue Book value is closer to $15,000.

Unfortunately, insurance carriers do not use Kelly Blue Book (, Edmunds, or any other vehicle valuation website.

Instead, each insurance carrier has its own proprietary system to calculate the ACV of vehicles.

However, the Kelly Blue Book value of your vehicle is generally close to the ACV determined by your insurance carrier. You should be able to use Kelly Blue Book and similar vehicle valuation websites to find a ballpark figure for your total loss insurance payout.

What Happens If I Don’t Like My Insurer’s ACV?

You paid $50,000 for your truck. You get into an accident ten months later, and your insurance company sends you a check for $34,000 because that’s the actual cash value of your vehicle. How is that fair?

Unfortunately for drivers, insurance companies love using actual cash value for insurance claims because it saves them money.

Insurers don’t want to cover the cost of a new vehicle while you’ve been driving an older vehicle around for years. They don’t feel obligated to buy you a new car just because you lost your old car. Insurance companies are for-profit businesses: they’re not charities.

For that reason, insurance companies try to compensate you exactly for the value of your loss. The value of your car the second before the accident was the original cost you paid minus depreciation: this was the vehicle’s ACV, and this is the value you lost from the accident.

If you’ve already experienced the total loss, then you have few options. You can dispute your insurer’s ACV claim with your adjuster, but that’s about it.

If you have not yet experienced a total loss, then you could change your insurance policy to a replacement cost policy. With a replacement cost policy, your insurer reimburses you for the cost of replacing your vehicle after an accident.

Alternatively, some drivers start an emergency fund to cover the difference between the value of your vehicle and the cost of replacing it.

Final Word

Actual cash value is the original cost of your vehicle minus any depreciation costs.

Total loss insurance claims can be frustrating for vehicle owners. Many vehicle owners are surprised to discover that the vehicle’s actual cash value (ACV) is much lower than they thought.

If you disagree with your insurer’s ACV for your vehicle, then you can dispute your insurance claim. Or, to avoid this problem in the future, you could switch to a replacement cost policy instead of an actual cash value policy.

James Shaffer
James Shaffer James Shaffer is a writer for and a well-seasoned auto insurance industry veteran. He has a deep knowledge of insurance rules and regulations and is passionate about helping drivers save money on auto insurance. He is responsible for researching and writing about anything auto insurance-related. He holds a bachelor's degree from Bentley University and his work has been quoted by NBC News, CNN, and The Washington Post.
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