Rachael Brennan has been working in the insurance industry since 2006 when she began working as a licensed insurance representative for 21st Century Insurance, during which time she earned her Property and Casualty license in all 50 states. After several years she expanded her insurance expertise, earning her license in Health and AD&D insurance as well. She has worked for small health insuran...

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Written by Rachael Brennan
Licensed Agent for 15 Years Rachael Brennan

Chris Harrigan has an economic degree from Limestone College and an MBA from Clemson University. He previously managed auto insurance claims for Enterprise Rent-A-Car. Currently, he is using his business and insurance expertise to provide insurance data analysis and visualizations to enhance the user experience.

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Reviewed by Chris Harrigan
Former Auto Insurance Claims Manager Chris Harrigan

UPDATED: Jun 21, 2022

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Key takeaways...

  • Insurance companies must calculate the value of damaged property before they can settle a claim
  • The carrier is only required to pay the claimant up to what the car is worth in the fair market when a car is totaled
  • It is the adjuster’s job to use valuation tools to determine what the car’s Actual Cash Value is
  • The adjuster will reference valuation guides from Kelley Blue Book and NADA guides as a starting point
  • The claimant can review the claims settlement offer and then negotiate with their agent to get a more than offered

When you file an insurance claim, your car is only worth as much as the insurance company says it is. It’s not how much you paid for the car or how much you financed the car for that the insurer uses to value your car.

This is why many people who are dealing with a claim after an accident are shocked to learn that their car holds a lot less value than they thought.

If you’re not aware of how your vehicle is valued when you file an insurance claim, it won’t have an impact immediately.

Make sure you have insurance coverage you can count on for the best price. Enter your zip code into our free rate tool above to begin comparing top insurers.

It’s not until you’re in a position where you’re relying on your insurer to pay out for a replacement vehicle that you’ll realize why how your carrier values your car is important. Here’s what you need to know:

Understanding Your Insurer’s Obligations


Auto insurance is not a physical product it’s an indemnity contract. Your insurance company is required by law to provide you a copy of the contract that you’re entering into when you buy a policy.

Written in this contract, in somewhat litigious language, it explains what your insurer’s obligations are.

Even though comprehensive and collision offer you money to repair or replace your car, a carrier doesn’t have to give you enough to buy the same exact car that you totaled.

In fact, the carrier, under the terms of the contract, is only obligated to pay the claimant up to the car’s Actual Cash Value when a property damage or physical damage claim is filed.

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What does Actual Cash Value mean?

All of the terms that may have a broad meaning are defined within the Personal Auto Policy contract.

Since Actual Cash Value might sound like a redundant term, it’s important that you know what it means in the insurance world before you assume that you’ll be getting more from a claim than you’re owed.

When it says that the insurer is obligated to pay up to your car’s Actual Cash Value, it means that the insurer will cut a check for the car’s replacement cost minus depreciation when the car is totaled after a loss.

Some cars have low values because the depreciate quickly or they are older. Other terms that are used to include ACV or fair market value.

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Who determines the value of your car when you file a claim?

If you file either a first-party claim or a third-party claim for damage to your vehicle, it will either be your insurer or the other party’s company that will issue you a claims check for your damages.

Typically, the other party’s insurer will pay you under Property Damage if the driver was at least 51 percent at fault for the crash.

Your insurance company will pay when you have full coverage and you were to blame for your own damages. It’s also common for the claim to be paid by your own insurer when the other party doesn’t have insurance or when it is a hit and run accident.

No matter which company pays, it will be the adjuster employed by that company who determines the value of the car.

What different factors can affect a vehicle’s Actual Cash Value?


There are a lot of different factors that can have an affect on your car’s value for insurance purposes. If you’re assuming a car that you’ve recently purchased or a car that you’ve taken good care of is worth more than it is, that can be dangerous.

Here are some of the many factors that can drive your ACV up or down:

  • The make and model and how popular the vehicle is on the market
  • The age of the vehicle
  • The trim level and color of exterior paint
  • The cosmetic condition of the interior and exterior of the car
  • How many miles the vehicle has
  • If the vehicle has had regular vehicle maintenance
  • If the vehicle has any aftermarket parts that would boost its value
  • Whether or not the car is in demand in the area

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What does the adjuster do to determine the car’s value?

Now that you know how condition, age, mileage, and features can affect your car’s Actual Cash Value, you might wonder if there’s a guide that helps adjusters look up the starting value of a vehicle.

Unfortunately, since there’s not one single reference tool that an agent representing the insurer can use, they might access a few different sources to come up with a final offer. These sources typically include:

  • NADA value guides a guide of values and other data used by lenders and dealers to price inventory
  • Kelley Blue Book valuation guides a consumer guide that buyers and sellers can use to price a used car
  • Classified listings showing how much vehicles being sold by owner or by dealer in the local vicinity are selling for
  • Sales data showing how much a specific make and model has sold for recently

Don’t Forget to Negotiate Value


The value that you’re offered by your adjuster is negotiable. It’s their job to keep the claims settlement low so it’s best for you to try and negotiate first.

You can ask for more because you’re not happy with the offer or you can hire an appraiser to come and value the car independently.

It’s not always worth it to carry full coverage. Make sure to look up what the depreciated value of the car is before you carry comprehensive and collision.

Use an online quoting tool to price the cost of full coverage and then you’ll be equipped with the knowledge you need to buy the right coverage. Use our comparison tool below to get started finding the best coverage for your situation.


  1. https://www.claimsjournal.com/news/national/2013/12/05/240841.htm
  2. https://www.nadaguides.com/
  3. https://www.investopedia.com/terms/i/indemnity.asp
  4. https://www.irmi.com/online/insurance-glossary/terms/a/actual-cash-value-acv.aspx
  5. https://www.independentagent.com/Education/VU/SiteAssets/Documents/ISO/PP/PP00010105.pdf
  6. https://www.rmiia.org/auto/steering_through_your_auto_policy/Glossary_of_Auto_Terms.asp
  7. https://www.scc.virginia.gov/boi/co/pc/auto/PP00010105.pdf
  8. https://www.irmi.com/articles/expert-commentary/what-exactly-is-actual-cash-value
  9. https://www.mass.gov/ocabr/docs/doi/consumer/faq-july-2012.pdf
  10. https://www.thebalance.com/understanding-full-coverage-auto-insurance-527412
  11. https://www.edmunds.com/car-buying/how-fast-does-my-new-car-lose-value-infographic.html
  12. https://www.investopedia.com/articles/personal-finance/100215/how-car-insurance-companies-value-cars.asp