How is Actual Cash Value determined?


Actual Cash Value (ACV) is a method of valuing insured property. It is also defined as the replacement costs that insurance companies pay for one’s damaged property after subtracting depreciation. The general rule in order to calculate the value of one’s vehicle includes taking into account the effect of depreciation due to wear, condition, and aging. But, each company has their own internal rules in determining ACV, and there is no universal method of determining it.

Most companies use a computerized evaluation process to help them determine the vehicle’s value, utilizing third party computer systems (e.g. CCC) that estimates costs in automotive claims and collision repairs. These software programs help determine the amount of work needed to refurbish the car from repair shops to dealer.

These tools used to compute the ACV amount may vary in approach, but these generally have the same principles and offer relatively close cash evaluations of one’s car. They generally consider factors such as the current retail prices of a vehicle, and private party values in computing the ACV. Other factors considered include the car’s actual mileage, condition, and its vehicle options. These tools include Edmunds, NADA, and Kelley Blue Book.

Fortunately, ordinary people could access these tools over the internet and use it themselves in determining the ACV of their car. It is important for drivers and motorists to calculate their car’s cash value so they would compare it with what insurance companies had determined, and see if it the price is accurate and fair. Here are the general steps in doing so:

  • The first step in personally determining the car’s value is to record the make, model, age, and mileage of his or her vehicle. Also, list any extra features as well as the car’s current condition. One has to keep this information as it will help when finding other cars that compatible with one’s own in order to determine a cash value.  
  • The second step is to access a website offering an ACV determining-tool, such as Kelley Blue Book. One has to check the features unique to his or her car, then choose its current condition. 
  • Third step, find cars that are comparable to one’s own. Contact local car dealerships, search local classified ads, and research over the internet to do so. 
  • Lastly, determine the car’s probable cash value using what one has researched on, and either have it available for potential purchasers or compile a report to one’s company.