UPDATED: Mar 13, 2020
It’s all about you. We want to help you make the right coverage choices.
We strive to help you make confident insurance decisions. Comparison shopping should be easy. We partner with top insurance providers. This doesn't influence our content. Our opinions are our own.
Finding the Actual Cash Value (ACV) of your vehicle is an art in itself – the market value may be one figure for one insurance company, and another figure for another insurance company. Indeed, with so many different factors affecting an insurance company’s judgment on a vehicle’s ACV, it is no wonder why different companies can come to different figures for the exact same car.
But why is it important to know your car’s ACV?
ACV – What is it, and why is it important?
The ACV of your vehicle is, simply put, how much your vehicle is worth at the time of assessment. You may have bought your car for $20,000, but you can be sure that your vehicle’s worth a lot less than what you have originally paid for when you’re assessing its ACV years, or even just months later.
This is because your car’s ACV falls immediately after it leaves the dealership’s hands by up to 30%! Even though your car is still “brand-new” when you’re driving it away from the dealership’s store, assessors will still count it as “used” once you lay your hands on it. We’ll talk more about calculating the ACV in the next section.
Knowing the ACV of your car is important, because insurance companies will be paying you that sum if you somehow end up totaling your vehicle. Understanding how ACV is calculated can help you negotiate a better ACV for your vehicle, thus increasing your insurance payout for your vehicle.
Calculating the Actual Cash Value of your car
In the calculation of your vehicle’s ACV, a few points are taken into account:
- The age of your vehicle – obviously, the older the vehicle, the lower the ACV because of wear-and-tear.
- How well you take care of your vehicle – do you turn up for servicing before the stipulated mileage? Do you change the vehicle’s engine oil as recommended by the mechanics? Doing this will increase your vehicle’s ACV as it proves that your vehicle is well-maintained.
- Vehicle Model – the model of your vehicle can affect your ACV. For example, if there’s a particular model that has been recalled because of faults, you will find the ACV of your vehicle much lower than other similar models of the same age.
- Mileage – the lower your mileage, the higher the vehicle’s ACV, as there will be less wear-and-tear due to lower vehicle usage
- Accidents – If your vehicle has never, ever been in an accident before, your ACV will be much higher compared to a vehicle that is in a less-than-pristine condition.
In addition, there are certain standardized methods to calculate a vehicle’s ACV, such as the Kelley Blue Book (KBB) or the NADA guide. These guides rate vehicles using several markers to determine the category of a vehicle. There are 6 categories in total, ranging from “pristine” to a “basket case”.
Your vehicle’s ACV – Why don’t you just ask the insurance companies?
Sadly, insurance companies are often reluctant to reveal the actual manner in which they determine your vehicle’s ACV when you are trying to claim the payout from them. Most insurance companies uses the KBB or NADA guide to determine your vehicle’s ACV using the category and points system, but the points given are subjective – a strict employee will be less generous with points than a lenient one.
There is reason behind this decision – every car owner will want to get the most out of their payouts, and they will never let go of an opportunity to dispute the assessment of these insurance companies. Indeed, with such subjective means of determining the ACV of your vehicle, who wouldn’t dispute the assessment in an effort to get a few thousand dollars more from the payout?
Is it possible to dispute the assessment of your ACV?
It definitely is! However, you must know that this is not easy – as insurance companies don’t release the exact details of how they assess your car’s ACV, it is hard for you to nitpick exactly which area they might have assessed wrongly.
Of course, there are blatant errors, such as “dents on the doors” when there obviously isn’t. Bring these up to your insurance company – these errors will definitely help boost your ACV. In addition, it is a must to have evidence to back up your arguments – while the previous examples simply warrants a simple visual check on your car doors, other points of dispute such as servicing will require proof from the car workshop to substantiate your stand.
Do keep in mind that insurance companies are just like any other corporation – their main motive is to reduce cost and increase revenue, thus increasing profits. This makes it tough for insurance companies to bulge from their final assessment of your ACV. Of course, argue for the ACV that you think is fair if you decide that your insurance company has underestimated your vehicle’s ACV.