What is the actual cash value of my car?

If your car is totaled in an accident, your insurance company will give you a check for your car's actual cash value, which is it’s value after depreciation.

Anna SwartzAndrew Hurst


Anna Swartz

Anna Swartz

Managing Editor & Auto Insurance Expert

Anna Swartz is a managing editor and auto insurance expert at Policygenius, where she oversees our car insurance coverage. Previously, she was a senior staff writer at Mic.com, as well as an associate writer at The Dodo.

&Andrew Hurst

Andrew Hurst

Senior Editor & Licensed Auto Insurance Expert

Andrew Hurst is a senior editor and a licensed auto insurance expert at Policygenius. His work has also been featured in The New York Times, The Wall Street Journal, Forbes, USA Today, NPR, Mic, Insurance Business Magazine, ValuePenguin, and Property Casualty 360.

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If your car is totaled and you file a claim, your insurance company will give you a check for your car's actual cash value (ACV), minus your deductible. While some car insurance companies use their own formulas to figure out your car's ACV, actual cash value is generally just your car's pre-collision value, which includes depreciation and wear and tear over the time you’ve owned it.

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That’s why your car's actual cash value is typically less than what you paid for it. If you want to ensure you’ll be paid enough to fully replace your totaled car with a brand new one, add new car replacement to your insurance coverage, which is available for newer vehicles. If you lease or finance your car, gap insurance can make up the difference between your totaled car’s ACV and what you still owe on your lease or loan.

Key takeaways

  • If your car is totaled in a wreck your insurance company will pay you it’s actual cash value.

  • Actual cash value refers to the insured value of your car, which accounts for depreciation over time, as well as any damage or wear and tear.

  • If you disagree with the insurance company’s valuation of your totaled car, you may be able to dispute it.

  • Adding new car replacement coverage or gap insurance to your policy can make sure you’re paid out enough to replace your total car or pay off your loan or lease.

What is the ACV of my car?

The actual cash value (ACV) of your car is the amount your insurance company will pay you after it's stolen, or totaled in an accident

Your vehicle's actual cash value is different from what you paid for the car when you bought it, which is called its retail value. After your car is totaled, whether you wrapped it around a telephone pole or it was damaged in a flood or by some other incident, you’ll have to submit a claim (assuming you have comprehensive and collision coverage). Then, your insurer will reimburse you for your car's actual cash value, minus your policy's deductible.

Let's say the car you've had for five years is totaled and you have to make a claim for the damage. Your insurance company may determine that over the last five years, your car lost one third of its value through depreciation and wear and tear. 

If a similar car costs $21,000 today (regardless of what you paid for it), you could find your car's actual cash value by subtracting one third from the cost to replace it. In this scenario, your insurance company would say that your car's ACV is $14,000, and you’d get a check for that amount, minus your comprehensive or collision deductible.

What is replacement cost vs. actual cash value?

Your car's replacement value is the amount of money that you would have to pay to replace it with a new one after a total loss. Unlike actual cash value, however, replacement value isn't tied to your car's depreciation.

While the actual cash value of your car usually decreases over time as it loses value, its replacement value doesn't necessarily go down as quickly. Instead, if the market for cars is tight and vehicles are expensive, or if your car is a rare model, its replacement value could remain stable or even go up over time.

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How do insurance companies determine the ACV of my totaled car?

It’s difficult to determine exactly how your insurer will decide the actual cash value of your car, since companies all use different formulas. But there are a few factors that commonly come in to play when companies calculate ACV, including:

  • The car’s age

  • Its total mileage

  • Its primary use

  • Any past accidents and damage

  • Any modifications you’ve added

  • Its salvage and resale value

Your insurance company may also consider the cost of comparable vehicles for sale in your area, in order to get a sense of how much your car would have been worth before it was totaled or stolen.

It's possible that your car's actual cash value may be hundreds or even thousands of dollars less than what you actually paid for it. Even if your car is only a few months old and doesn't have many miles on it, it still starting depreciating as soon as you drove it off the dealership's lot.

→ Read more about what happens when a car is totaled

What is the difference between actual cash value and fair market value?

Your car's actual cash value and its fair market value are different. While its actual cash value is the amount your insurer will pay you for it if it’s totaled, your car's fair value is what it could reasonably sell for if you put it on the market (before the accident). Depending on the number of potential buyers, there may be a range of prices someone would pay for your vehicle.

After an accident, your car insurance company may use your car's fair market value to find its actual cash value.

Gap insurance and new car replacement coverage

As long as you have comprehensive and collision coverage, you’ll be paid out the ACV of your car if you total it in an accident. But there are some additional coverage options that can offer even more protection, in case just being paid the ACV isn’t enough.

Gap insurance

If you're leasing or financing your vehicle, getting gap insurance, also called gap coverage, is a good idea. In fact, your lessor or lender may require you to add it to your policy. Gap insurance just pays off the gap between the ACV of your totaled car and whatever you still owe on your loan or lease.

Let's say that you're financing your vehicle with a $30,000 loan. You still have $20,000 left to pay on your loan when you're in an accident and total your car. Your insurance company determines that the actual cash value of your car is $15,000. Your insurance claim will pay your $15,000, minus your deductible of $1,000. If you had gap insurance, it would cover the remaining $6,000 between your insurance payout and the remainder of your loan.

New car replacement coverage

Another way to avoid paying for your car's lost value after an accident is by getting new car replacement coverage. New car replacement coverage means that, if your car is totaled, you’ll be offered enough to replace your damaged car with a new car of an identical or equal make and model. Some insurance companies even offer coverage that will pay to replace your totaled car with one that’s one or two model years newer.

However new car replacement coverage can be an expensive endorsement, and it’s usually only available to drivers who are the first owner of a car that’s less than two or three years old.

How to dispute your insurance company’s valuation

After your insurance company determines your car's ACV and comes up with a settlement, you have the option of disputing their offer if you think it's too low. To do this, you'll need to show that your car would have been worth more at fair market value than you were offered. The best ways to build a case are by:

  • Researching the price of cars in your area: Search for cars that are similar to yours, not just in make and model, but in age, use, accident history. To lend your research more credibility, look for cars at dealerships or through independent valuation companies, not cars that are sold over social media marketplaces.

  • Consider getting your car appraised: Getting your car appraised by an independent professional is a great way to get a sense of its value from a reputable source. It may be more expensive than doing your own research, but it could make your case stronger. Obviously it’s easier to get your car appraised before it’s totaled, as a preventative measure, but an appraiser may still be able to help you even after an accident.

  • Complete your insurer's process for disputing claims: If you decide to dispute a low settlement offer or valuation, make sure to follow your insurer's process for disputes. This may include submitting relevant evidence on time, filling out paperwork that your insurer requires, and submitting to questioning. While these processes may seem complicated, your insurance company may just consider your dispute invalid if you don't follow the proper course of action.

If your research shows that your insurer's valuation is lower than your car's expected market value and depreciation, you may be able to negotiate with your insurance provider for an adjusted settlement. You could consult a lawyer to help you navigate through this process, but it's typically not necessary.

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Frequently Asked Questions

What does actual cash value minus deductible mean?

Actual cash value minus deductible is a way of showing your payout after your car is totaled. Since you have to pay a deductible when you make a claim for physical damage (that’s a claim covered by your comprehensive or collision coverage), the final amount you receive will be equal to your car's actual cash value minus your deductible amount.

How does insurance determine a total loss?

Insurance companies usually declare a car to be a total loss when the costs to fix it are above a certain percentage of the car's value. Some states have laws that define this benchmark with a percentage. Once the cost of repairing your car exceeds the threshold, it's declared a total loss.

Will insurance pay for my car's retail or trade-in value?

Your insurance company pays for your car's retail value. Your insurance calculates the value of your car by determining how much it would take for you to replace it or buy it. This is different from its trade-in value, which is what a dealer would pay you for your car in order to sell at a profit.