Glossary

Actual cash value

What a car was worth just before a loss — replacement cost minus depreciation — and the basis of most total-loss payouts.

Also called: ACV

Actual cash value (ACV) is what your car was worth in the local market immediately before it was damaged or stolen. It is the standard measure insurers use for physical damage claims under a personal auto policy, and it is the most a standard policy pays when a car is a total loss.

Conceptually, ACV is the cost to replace the car minus depreciation. In practice insurers estimate it from recent sales and dealer listings of comparable vehicles, adjusted for mileage, options and condition. Suppose comparable cars sell for $16,000 and yours has above-average mileage worth a $600 deduction: the ACV is $15,400. The insurer then subtracts your deductible, so with a $500 deductible the payout is $14,900, plus sales tax and fees where state rules require them.

ACV is not what you paid or what you owe. If your loan balance is higher than the car's value, gap insurance covers the difference. Many states, following an NAIC model regulation, require insurers to explain how they valued the car and to base the figure on comparable vehicles; California, for example, requires comparables identified by VIN. If the number looks low, you can supply your own comparables and negotiate.

Last reviewed October 4, 2026

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Related terms

Total loss A car so badly damaged that repairs would cost more than it is worth, or more than a state threshold, so the insurer pays its value instead. Depreciation The loss in a car's value over time from age, mileage and wear, which insurers account for when calculating actual cash value. Replacement cost What it would cost to replace damaged property with new property of like kind and quality, with no deduction for depreciation. Gap insurance Pays the difference between a totaled car's actual cash value and the larger balance still owed on its loan or lease. Agreed value Coverage where you and the insurer set a car's value when the policy is written, and that amount is paid if the car is totaled, with no depreciation.

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Related insurers

American Modern Insurance Group (Munich Re) Munich Re's U.S. specialty personal lines arm, insuring collector cars, motorcycles, ATVs, boats and manufactured homes through agents in all 50 states.

Related tools

Should I drop full coverage? calculator Weigh what collision and comprehensive cost each year against the most they could ever pay on an older car, using the 10% rule of thumb. Gap insurance calculator Chart your loan balance against the car's falling value to see how long you would owe more than it is worth — the window gap insurance covers. Total loss payout estimator Estimate a total-loss settlement, what goes to your lender, and whether you would still owe money on a totaled car.