Actual Cash Value of a Total Loss Vehicle: What You Need to Know

What is Actual Cash Value?

You were in an accident. Your vehicle was deemed a total loss. If you have the appropriate physical damage coverage, you will likely receive an insurance payment for the "actual cash value" (ACV) of your car. Actual cash value is another way of saying your vehicle's market value. To get a better understanding, it's important to first learn how the actual cash value for a vehicle is determined.

What is a Total Loss Vehicle?

If you have an accident, your vehicle may be deemed a total loss vehicle. These three reasons often explain why:

  • The cost to repair the vehicle is equal to or exceeds its actual cash value
  • The cost to repair plus the salvage value (money recouped by the insurance company from an authorized salvage dealer) equals or exceeds the actual cash value of the vehicle
  • The car is too unsafe to repair

Some states require a vehicle be deemed a total loss when the cost to repair the vehicle exceeds a certain percentage of the actual cash value of the vehicle. In states where regulations do not determine the percentage, your insurance companies may have its own guidelines.

Actual Cash Value According to Kelley Blue Book®

Consumers often utilize Kelley Blue Book® to value their vehicles. Kelley Blue Book factors in the year, make, model, mileage, options, condition and location of your vehicle and then provides four different values for the vehicle: retail, trade-in, private party and certified pre-owned. The private party value of the vehicle most closely resembles the actual cash value of the vehicle. Of course, the accuracy of this valuation relies on how you assess the condition of your vehicle.

While Kelley Blue Book is popular, other valuation guides that track vehicle values include Edmunds® and NADA®. But keep in mind that these are only guides that track vehicle values. Consumer bias toward their car's condition, data lag between current car values and what's in the guides, and current wholesale pricing explain why the valuations and the actual cash value of your vehicle may differ.