What is "actual cash value" in a car accident claim?

If you're making a vehicle damage claim after 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, they'll pay to replace the car. This can occur if:

• you're making a claim under your own collision coverage or comprehensive coverage, or
• you're making a third party car insurance claim with the other driver's insurance carrier.

Learn more about what it means when the insurance company says your vehicle is a "total loss."

Different people can have different ideas of what the replacement value—the "actual cash value"—of your car—actually is.

How Is "Actual Cash Value" Determined?

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's usually used is Kelley Blue Book.

If you disagree with the insurance company's valuation of your vehicle, it usually means that:

• 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
• you agree that the vehicle is a total loss, but you think the insurance company should pay you more to replace the vehicle.

Do I Need an Attorney's Help With a Vehicle Damage Claim?

It probably makes sense to handle a vehicle damage claim on your own after a car accident, even if you disagree with the insurer's calculation of the "actual cash value" of your car. That's especially true if you're dealing with your own insurance company.

One thing you can do is ask the adjuster how they arrived at the "actual cash value" figure. Make sure they considered any customization, extra features or equipment you added to the vehicle. And do your own research. Look up online ads, and if they show asking prices that are consistently higher than the adjuster's valuation of your vehicle, bring the ads to the adjuster's attention as a basis for boosting the number.

But if your car accident also resulted in injuries, or if you and the insurance company disagree on bigger issues (like who's going to pay to get your car fixed), it might make sense to run your situation past a lawyer. Learn more about how a car accident attorney can help.

by: David Goguen, J.D.