How Insurers Calculate a Totaled Car's Actual Cash Value

Actual cash value is the market value of your car immediately before the loss: what it would have cost to buy a car like it, in your area, in that condition, on that day. It is not what you paid for the car, what you still owe on it, or the price of a new one.

Because it is a market value, depreciation is already built in. That is why two cars of the same model can have very different values, and why the details of your car matter so much.

Most insurers do not set the value by hand. They send your car's details (VIN, mileage, options, and a condition rating) to a valuation vendor, which searches for comparable vehicles for sale, and sometimes recently sold, within a radius of where you live.

Each comparable's price is adjusted so it represents a car equipped and driven like yours. The adjusted values are then combined into a base value for your car.

Most of the difference between a fair value and a low one sits in the adjustments, not the comparables' prices.

• Mileage: each comparable is moved up or down for the difference between its mileage and yours.
• Options and packages: options your car has and a comparable lacks should add value, and the reverse should subtract it. Your VIN's factory build is the check.
• Condition: your car is rated against a typical car of its age, and the rating becomes a dollar adjustment.
• Prior damage: unrepaired damage that existed before the loss can be deducted.
• Asking price versus selling price: some methods reduce advertised prices toward what cars are expected to sell for.

The base value is not the amount you are paid. Several lines are added or subtracted after it, and each depends on your state, your policy, and whose insurer is paying.

• Sales tax, title, and registration fees are added in many states, particularly when the insurance claim is with your own insurer.
• Your deductible is subtracted when the payment comes under your own collision or comprehensive coverage.
• A lender or leasing company is paid first, up to what you owe.
• If you keep the car, its salvage value is subtracted.

Ask the adjuster for the full valuation report, not the summary page. Confirm the VIN, trim, mileage, and options against your paperwork. Check that the comparables are close to you, current, and the same trim. Then compare the adjusted values with cars listed for sale near you today.

Write down each error with the evidence for it. A specific, documented list is what gets a valuation re-run.