What Is "Actual Cash Value" in a Car Accident Claim?

"Actual Cash Value" Determines Whether a Vehicle Is a "Total Loss"

If you're making a claim for vehicle damage after a car accident, you might hear the insurance adjuster toss around the phrase "actual cash value," especially 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 usually deem it a "total loss." So, instead of paying for repairs to the car, they'll pay you compensation in an amount equal to its "actual cash value." This can occur if:

• you're making a claim under your own collision coverage or comprehensive coverage after a crash, 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."

How Does the Insurance Company Determine a Vehicle's "Actual Cash Value"

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.

The insurance company is also supposed to consider any modifications and enhancements to a vehicle in determining its actual cash value. So, if you paid $4,000 for a set of custom wheels to replace the vehicle's basic factory-issued wheels, or you added a custom paint job or body work, those add-ons should be taken into account by the insurance adjuster.

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

What If I Disagree With What the Insurance Company Says My Car Is Worth?

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.

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, as we touched on above. And do your own research. Look up online listings from a variety of reputable sites and apps, and if they show prices that are consistently higher than the adjuster's valuation of your vehicle, bring those listings to the adjuster's attention as a basis for boosting the number.

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.

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.