To determine your vehicle's ACV, your auto insurance company will analyze the mileage, the age of the car, signs of wear and tear, and your accident history. Your ACV is the cost of replacing the vehicle, minus the deductible you pay for comprehensive or collision insurance. Assuming that the vehicle is total, the adjuster performs an appraisal and assigns a value to the vehicle. The damage caused by the accident is not taken into account in the evaluation.
What the adjuster seeks to estimate is what a reasonable cash offer for the vehicle would have meant immediately before the accident occurred. How do insurance companies determine the stroke of my damaged car? Once the adjuster has checked the vehicle, he will use a computer program to determine the cost of repairing any damage related to an accident. The program will provide an estimate of how much it should cost to repair your car. If there are any problems or questions about damage and repairs, you can consult a mechanic or an expert in car body repair.
To do this, the company will use real cash value (ACV), which is the current market value of the car minus depreciation. Actual cash value refers to the insured value of your car, which represents depreciation over time, as well as any damage or wear and tear. Since you have to pay a deductible when you file a claim for physical damage (i.e., a claim covered by your comprehensive or collision coverage), the final amount you'll receive will be equal to the actual cash value of your car minus the amount of your deductible. You'll need to show that the value of your car is higher than the value your insurance company determined and you'll need to provide detailed records of your car's maintenance.
While the actual cash value of your car generally decreases over time as it loses value, its replacement value doesn't necessarily decrease as quickly. Once the claims adjuster determines how much the insurance company is willing to pay to repair your vehicle, you can sign an authorization to accept payment and make repairs or reject the evaluation and attempt to negotiate the claim. Researching the value of your car with KBB, Edmunds, NADA, or even with an outside appraiser or claims adjuster can help you determine the value of your car and give you an idea of what a fair payment is for resolving a claim. These values usually differ from determining the value of your insurance company and the ACV, since your provider will consider the costs of amortization and replacement of the car when calculating the value.
While its real cash value is the amount your insurer will pay you for it if added together, the fair value of your car is what could reasonably be sold if you put it on the market (before the accident). The actual cash value of your vehicle is different from what you paid for the car when you bought it, which is called retail value. Most insurance policies cover the actual cash value of your car in the event of a claim and will use a third party to determine the ACV of your vehicle. After an accident, your car insurance company can use the fair market value of your car to determine its real cash value.
Edmund's car value appraisal tool allows you to see the value of your car and compare it to other KBB car values. When your vehicle is involved in an accident, your insurance company pays you for the total value of the car, or more accurately, pays you the value you claim to have.