Actual cash value
What a car was worth just before a loss, after depreciation, which is what most insurance pays on a total loss.
Actual cash value (ACV) is the market value of a vehicle just before it was damaged or stolen, taking age, mileage, condition and depreciation into account. Standard auto policies pay ACV, not what you paid or what you owe.
ACV drives two decisions for owners of damaged cars: whether the insurer declares a total loss, and how much the settlement is. If you think the valuation is low, you can present evidence such as recent comparable sales and receipts.
The Insurance Information Institute notes that most standard policies will not pay to repair a vehicle that is totaled, meaning the repairs cost more than the cash value assigned to the car, and that it is up to the insurer to decide whether to repair or pay its book value.1
References
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Insurance Information Institute, “Determining your car’s value and cost of repair”, https://www.iii.org/article/determining-your-cars-value-and-cost-of-repair ↩