How to Determine Your Car’s Cash Value

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The insurance formula for calculating the actual cash value (ACV) of your car isn’t public knowledge. But you can use resources like Kelley Blue Book to help you get an idea of what your car might be worth.
Following an accident that totals your car, you might expect to be reimbursed for what you paid for it. In reality, you’ll receive what the insurance company values your car to be worth right before the accident.
If you are replacing your totaled car, it’s better to set realistic expectations than experience disappointment. A diminished value calculator can give you a better idea of how your car might have depreciated over time.
To help you better understand your car’s ACV, insurance comparison shopping app Jerry has compiled a handy list of tips to help you arrive at a realistic number. And if you’re unhappy with your coverage, Jerry can help you find a better car insurance plan that might even save you money!

How to calculate the ACV of a car

It’s estimated that cars lose roughly 20% of their value after the first year of driving—and continue to depreciate each year thereafter.
After an accident, if the damage to your car is greater than a certain percentage of the ACV, the vehicle could be deemed a total loss. In this case, you could receive a payout for your car instead of the replacement cost or repair reimbursement. 
Calculating the ACV of your car is really challenging. Most insurance providers use proprietary models or third-party vendors. There’s no straightforward formula, so it’s best to seek clarity from your insurance provider.
Key Takeaway Understanding ACV—and, more specifically, your car’s ACV—can help you ensure a fair payout from your insurance company after your car is totaled. 

What is the actual cash value of my car?

A car’s ACV is what it is worth today. It accounts for a car’s current condition and inevitable depreciation. Simply put, the ACV is what an insurance company will pay, not the initial price of the car.
The ACV of a car takes the following, among other factors, into consideration:
  • Mileage
  • Accident history
  • Wear and tear
Since a car depreciates from the first time you drive it and every time after, an insurance company must account for the daily wear and tear when declaring it as a total loss. 
You will never be able to know your car’s exact ACV since research and comparables can only get you so far. It’s important to understand that your car will never be worth what you paid for it. This is just the reality of car ownership.
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Can you manually calculate the ACV of your car?

It’s tough to manually calculate the ACV of your car. But you can research what your car is selling for on the current market to find the average price, including depreciation. 
Here are some resources that can help:
  • Dealership sites for your vehicle make
  • eBay
  • Autotrader
  • Facebook Marketplace
  • Kelley Blue Book
While this is useful information, it might not be what your insurance company has in mind for the ACV of your car.
Another downside is that your own research might be met with some level of skepticism. While you may have the option to hire a private appraiser, they often cost between $200 and $300 and your insurance company doesn’t have to agree with their appraisal.
That said, it doesn’t hurt to come to that table with a higher ACV properly calculated by a third party with expertise.

Can you dispute your car’s ACV with your car insurance company?

Yes, an insurance company can change its mind and reverse its decision. You would need to make a case backed by evidence—so if you go this route, make sure you’re prepared with a strong argument. 
You can build a case by researching the same sites mentioned above, such as Autotrader and Kelley Blue Book. Used car dealers are often a good resource, too. Make sure your research is exclusively based on your car’s make and model.
Key Takeaway You can appeal the ACV an insurance company assigns to your totaled car, but it’s challenging and you need to make a strong case supported by evidence.

What about gap coverage or new car replacement insurance?

There are two other types of car insurance that can minimize risk if your car is totaled in an accident. 
If you have new car replacement insurance, you should receive the dollar amount that you need to replace your totaled vehicle with the same car or a similar one.
Gap coverage helps pay off your car loan if your vehicle is totaled. It covers the difference between what you owe on your totaled vehicle and any settlement you reach with an insurance company after an accident.

Finding cheap car insurance

After your claim has been processed and you’ve gotten a new car, it might be time to reassess your insurance coverage. There’s a chance you’re overpaying or that your coverage isn’t extensive enough. 
The car insurance super app Jerry can help you find the best coverage for the lowest price in just 45 seconds! Jerry compares rates from more than 50 insurance companies and handles all the paperwork once you pick a policy. 
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Replacement cost is often viewed as the better option for auto insurance. The reason is that it typically offers additional protection against increases in the cost of labor and materials.
This depends on your insurance coverage and your type of car. There’s no clear formula or method to figure out what your totaled car is worth. It is always up to your insurance provider and based on your coverage.

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