What is “actual cash value” in a car accident claim?

If you’re making a vehicle damage claim in the wake of a car accident, you might hear the insurance adjuster toss around the phrase “actual cash value” if your car is approaching the “total loss” designation.

When the cost of fixing your car exceeds the vehicle’s “actual cash value,” the insurer will deem it a “total loss” and instead of paying for repairs, will pay to replace the car. This can occur if you’re making a claim under your own collision or comprehensive coverage, or if you’re making a third party liability claim with the other driver’s insurance carrier.

But different people can have different ideas of what the replacement value -- the “actual cash value” of your car -- actually is.

A vehicle’s actual cash value is usually set based on an examination of the sale price of the same or similar vehicle -- model year, make, condition, options -- in the same geographic area. One valuation resource that is usually used is Kelley Blue Book.

If you disagree with the insurance company’s valuation of your vehicle, it usually means that 1) you don’t think the vehicle should be designated a total loss (you think the insurer should pay to fix it, in other words,) or 2) you agree that the vehicle is a total loss, but you think the insurance company should pay you more to replace the vehicle.

One thing you can do is ask the adjuster how they arrived at the “actual cash value” figure. Make sure they considered any extra features or equipment on the vehicle. And do your own research. Look up online ads on Craigslist and elsewhere, and if they show higher asking prices, bring those ads to the adjuster’s attention.