Otto Larson - Vice President & Partner
A vehicle’s actual cash value (ACV) represents how much it is worth given its current age and condition in today’s market, including depreciation. If you’re in an accident and your car is totaled, your insurer will only reimburse the ACV of your vehicle, not the original price you paid for it.
In an interview with Fox Money, Partner Otto Larson explained the difference between a car’s ACV and its replacement cost; how the ACV is calculated in car insurance and if you can negotiate an ACV settlement with your insurer.
“Most vehicle insurance policies are written on an actual cash value basis and there are several factors that car insurance companies use to calculate ACV,” Otto said. “Some of these may include the make and model, age, mileage, condition, interior and exterior features, and location.”
If your car is totaled, the vehicle’s replacement value is the amount you would need to buy a new car of the same make and model and with similar features. The actual cash value is often significantly less. If you don’t think the ACV assigned by your insurer is correct, you can negotiate that amount as part of the loss adjustment process.
“The customer may have additional details about the vehicle that the insurer is unaware of,” Otto commented. “For instance, you may have added aftermarket parts that increase the value.”
Read the full story here.