Will I Get Actual Cash Value for my Car if It is Totaled?

If you are in an accident and your car is damaged there is the possibility that your car will be 'written off.' What this means is that the insurance agency will pay you the 'actual cash value' of your car at the time it was damaged. Actual cash value does not mean the MRSP amount or the "blue book" amount of your car but instead refers to a complex amount as determined by your car insurance provider. What this means is that you cannot expect $20,000 from your insurance provider for a car that you bought for $20,000 two years ago. Actual cash value does not work like this.

How Actual Cash Value Works

Actual cash value refers to the amount your car is worth based on the pre-accident condition of your car when compared with other cars with similar models, makes and conditions in your area. Things like applicable sales tax, title and registration fees will be considered as will the total mileage, age, overall condition of the car and average retail selling price of the vehicle in your specific area. Provided that you have adequate collision and comprehensive insurance, if you are ever in an accident and your car is damaged your insurance provider will either offer to pay for the repair costs or offer you an actual cash value settlement, depending on which is the lower of the two. Other times that you will be offered actual cash value is if the vehicle cannot be repaired safely or if the state laws require the insurance company to call it a total loss.

Actual Cash Value Considerations

When you are offered actual cash value for your car it is important that you do a little bit of research on your own to ensure this amount is actually accurate. Look for similar cars in your paper, on the internet and through Kelley Blue Book to see what the value of your car is. If you have recently done work to your car, such as installed a new CD player, had new tires put on it or done some other job, then you should let your provider know and show receipts of this change. This could impact your ACV.

What happens to the check for your actual cash value will depend on your situation with your car. If you own the vehicle outright then the check will go to you. You can use this money to purchase a new car or add new cars to your policy if you want or use it for anything else you wish. If you are leasing the car then the payment will go directly to the leasing company, not to you. If you are financing the car then you will get to keep the difference once the finance or lending company has been paid off.

Another thing to consider when it comes to car actual cash value is the insurance extra "Guaranteed Replacement Cost." This is a policy option where you will be offered a high enough amount of money to buy a new car, regardless of how much the ACV turns out to be. You can expect a higher premium if you choose to add this to your policy; however, you will also get a new car out of the accident if your vehicle is totaled. It is important that you understand the terms and conditions of actual cash value before you actually buy your car insurance policy. That way you will know how much your car is worth and what you can expect if you are faced with an accident.

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