ACV — Actual Cash Value

Getting the Actual Cash Value of Your Vehicle (2021)

ACV - Actual Cash Value

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Getting the actual cash value ( or ACV) of your vehicle is an art in itself – the market value may be one figure for one insurance company, and another figure for another insurance company.

Indeed, with so many different factors affecting an auto insurance company’s judgment on a vehicle’s ACV, it is no wonder why different companies can come to different figures for the exact same car.

So, what is your vehicle worth? If you want to find affordable auto insurance rates after finding out your ACV estimate, enter your ZIP code in our free online tool above.

What is actual cash value of my car? 

The actual cash value of your car is, simply put, how much your vehicle is worth at the time of assessment.

You may have bought your car for $20,000, but you can be sure that your vehicle’s worth a lot less than what you have originally paid for when you’re assessing the actual cash value of your car years, or even just months later.

How is actual cash value determined?

This is because the actual cash value of your car falls immediately after it leaves the dealership’s hands by up to 30 percent. Even though your car is still “brand-new” when you’re driving it away from the dealership’s store, assessors will still count it as “used” once you lay your hands on it.

We’ll talk more about calculating the ACV in the next section.

When would I need to use actual cash value?

Knowing the actual cash value of your car is important because insurance companies will be paying you that sum if you somehow end up totaling your vehicle. 

Understanding how ACV is calculated can help you negotiate a better ACV for your vehicle, thus increasing your auto insurance payout for your vehicle.

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How to Find the Actual Cash Value of Your Car

So how do you calculate ACV? In the calculation of actual cash value of the vehicle, a few points are taken into account:

  1. The age of your vehicle – obviously, the older the vehicle, the lower the ACV because of wear-and-tear.
  2. How well you take care of your vehicle – do you turn up for servicing before the stipulated mileage? Do you change the vehicle’s engine oil as recommended by the mechanics? Doing this will increase your vehicle’s ACV as it proves that your vehicle is well-maintained.
  3. Vehicle Model – the vehicle model and make affect your insurance rates as well as your ACV. For example, if there’s a particular model that has been recalled because of faults, you will find the ACV of your vehicle much lower than other similar models of the same age.
  4. Mileage – the lower your mileage, the higher the vehicle’s ACV, as there will be less wear-and-tear due to lower vehicle usage
  5. Accidents – If your vehicle has never, ever been in an accident before, your ACV will be much higher compared to a vehicle that is in a less-than-pristine condition.

In addition, there are certain standardized methods to calculate a vehicle’s ACV, such as the Kelley Blue Book (KBB) or the NADA guide. These guides rate vehicles using several markers to determine the category of a vehicle. There are 6 categories in total, ranging from “pristine” to a “basket case.”

How do auto insurance companies calculate ACV?

However, ACV versus NADA estimates or ACV versus KBB estimates will be different, as determining ACV can be slightly subjective. However, there is usually a baseline of what the ACV depreciates to. The table below shows the KBB’s ACV depreciation estimates for how much a car’s value will go down.

Eventually, your car will depreciate in value so much that the ACV will become zero.

Can I ask the auto insurance company for actual cash value?

How does insurance calculate actual cash value? Sadly, insurance companies are often reluctant to reveal the actual manner in which car insurance companies value cars (your vehicle’s ACV) when you are trying to claim the payout from them.

Most insurance companies use the KBB or NADA guide to determine your vehicle’s ACV using the category and points system, but the points given are subjective – a strict employee will be less generous with points than a lenient one.

There is a reason behind this decision – every car owner will want to get the most their payouts, and they will never let go of an opportunity to dispute the assessment of these insurance companies.

Indeed, with such subjective means of determining the ACV of your vehicle, who wouldn’t dispute the assessment in an effort to get a few thousand dollars more from the payout?

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Keep in mind that insurance companies are just any other corporation – their main motive is to reduce cost and increase revenue, thus increasing profits.

This makes it tough for auto insurance companies to budge from their final assessment of your ACV. Of course, argue for the ACV that you think is fair if you decide that your insurance company has underestimated your vehicle’s ACV.

How to Dispute Your Insurance Company’s Valuation

You must know that negotiating actual cash value is not easy – as insurance companies don’t release the exact details of how they assess your car’s ACV, it is hard for you to nitpick exactly which area they might have assessed wrongly.

Of course, there are blatant errors, such as “dents on the doors” when there obviously isn’t. Bring these up to your insurance company – these errors will definitely help boost your ACV.

In addition, it is a must to have evidence to back up your arguments. While the previous examples simply warrant a simple visual check on your car doors, other points of dispute such as servicing will require proof from the car workshop to substantiate your stand.

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Frequently Asked Questions: Getting The Actual Cash Value of Your Vehicle

If you are not yet ready to buy auto insurance, keep reading to see what others are asking about ACV and their vehicles.

#1 – Does ACV cover theft?

ACV is not an auto insurance coverage, so it won’t cover anything. However, if you have comprehensive coverage, your insurer will cover theft. The claim amount you receive will be the ACV of your vehicle.

We highly recommend carrying comprehensive coverage. According to the Insurance Information Institute, the rate of stolen vehicles was “228.9 per 100,000 people in 2018,” costing an average of six billion. Having comprehensive coverage will make sure you aren’t paying for a new car pocket.

#2 – What is the difference between replacement cost and actual cash value?

RCV is the replacement cost value, which is the value of a product without depreciation. In comparison, ACV calculates the deprecation of a car to determine the current value.

#3 – Which is better: actual cash value versus replacement cost?

Replacement cost (RCV) is better when it comes to an accident, as it will cover a higher amount because it replaces products without depreciation. However, RCV will cost more than ACV. Which one is better depends on your situation and finances.

#4 – Is ACV the same as trade-in value?

The ACV is very similar to trade-in value, as the trade-in value is what the seller determines a car to be worth. So if you wanted to trade in your vehicle for a new one, the seller would first calculate your current vehicle’s trade-in value to determine what you would pay for your new car.

However, trade-in value is usually used as a term for car swapping, while ACV is used for insurance terms.

Knowing what your ACV estimate is will be vital if you get into a car accident and need a new car. Because accidents can raise your rates, make sure to shop around for auto insurance quotes by entering your ZIP code.


How to Calculate ACV — Actual Cash Value of Your Car

ACV - Actual Cash Value

If you’re looking to learn how you can calculate the actual cash value of your vehicle (ACV), then you’ve come to the right place.

Perhaps you were in a total loss accident, or you’re just curious to know what your car is worth in cash. In either case you’ll need to know how much your car is worth.

Value is a subjective thing, and there are a lot of myths out there as to how you determine it for your vehicle. In the following article, we’ll lay out this process carefully and dispel any misconceptions you might have. Specifically we’ll talk about…

What is Actual Cash Value?
How is Actual Cash Value of Your Car Determined? 
Can You Dispute an ACV assessment?

Let’s get started….

What is the Actual Cash Value of My Car?

The phrase actual cash value can be in reference to someone’s car trade in or property value. Actual cash value is most commonly used to refer to the value of a damaged vehicle, to determine if it will be totaled out or repaired.

You may have heard that a new car loses an automatic percentage of its value the second it’s driven off the lot.

From Ameriprise Insurance’s website:

“Actual cash value is another way of saying your vehicle’s market value.” [1]

For example, Driver A pays $10,000 for his car and drives it home. He then (hypothetically) decides to sell it to his neighbor one hour later. The neighbor offers $9,000. The inherent value of the car has not changed in one hour, but it’s ACV has.

To further understand ACV the best thing to do is learn about how its value is determined.

How is Actual Cash Value Determined?

Anyone who tells you there is one predefined way of reaching an ACV figure is misleading you. Approaches vary by state, auto body shop, and insurance carrier.

The main factors considered are:

  • Accident history
  • Current Age of Vehicle
  • Expected life span of vehicle
  • Maintenance History (was it well taken care of?)
  • History of the specific model (for example: were there any recalls?)
  • Mileage
  • Replacement cost/purchase price of the vehicle

Here are some common methods of determining actual cash value:

Fair Market Value:

This method of valuation is arrived at by surveying the market and concluding on some average. This can be done through quote shopping, checking wholesale prices or reviewing comparable vehicles. Insurance companies are often aggressive with pushing low fair market values, so be aware of that.

Replacement cost:

Sometimes it’s not possible to use outside factors to reach a fair market value for a vehicle. In this case, insurance adjusters will turn to figuring out the replacement cost — which is exactly what it sounds , the cost of replacing the vehicle. Replacement cost is the replacement price of a new vehicle, minus a set amount of depreciation to be deducted from the total.

Book Value:

There is also what is referred to as “book value”. The Kelley Blue Book is the most common source used to reference the ACV of a vehicle.

The Blue Book will come up with a value ‘year, make, model, mileage, options, condition and location of your vehicle and then provides four different values for the vehicle: retail, trade-in, private party and certified pre-owned.’[2] Although Blue Book is the most famous, Nada and the Black Book are also used.

Most insurance adjusters will use some variation of the methods described herein for reaching the ACV of your vehicle. Many of them will use computer systems to aid this process.

Can You Dispute an ACV assessment?

Of course, you can. Some unscrupulous insurance companies may try to lowball you on the ACV of your car. Bigger carriers may be more honest but are also incentivized to offer you less.

If you feel that the price assessed to your vehicle is unfair, there are a number of things you can do.

  • You can ask for a copy of the vehicle valuation report
  • You can get an independent appraisal done
  • You can provide receipts or other documentation of vehicle upgrades
  • You can point out any mistakes or logical flaws in the insurance company’s figures

According to the guidelines of good faith claim handling, an insurance adjuster must listen to you if you raise valid points. If they don’t, you can file a complaint with your state’s insurance commission or better business bureau.

Some states even have added protections for consumers and consumer-friendly interpretations of insurance terms — so if you want to know the specific details check your state laws regarding ACV calculations and determinations.

What About Classic Cars?

With older vehicles, it is not possible always possible to get actual cash value for a totaled car. In this case you would need to have a “stated value” or “agreed value” policy — basically you decide ahead of time how much you should receive if the car is totaled.


Totaling a vehicle is never a fun experience, and being confused about its value when you’re trying to get it replaced compounds the problem. As mentioned at the top, there is a bit of subjectivity in play when it comes to ACV calculations.

But in order to be prepared (and keep your insurance company honest) you need to know the basics:

    • The actual cash value of a vehicle is the amount of money it’s worth on the open market.
    • ACV is determined by a variety of methods. Most insurance companies will use some mixture of the book value, the fair market value or the replacement cost to tell you what your car is worth.
    • If you are unhappy with the ACV value assigned to your car you can dispute it. Doing this is best achieved through additional evidence, understanding the insurance companies methodology and getting an independent appraisal done.


1 – Ameriprise Insurance
2 – Kelley Blue Book

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Actual Cash Value vs. Replacement Cost in Homeowners Insurance

ACV - Actual Cash Value

There are three options when it comes to calculating the amount of protection your renters or homeowners insurance will provide: actual cash value (ACV), replacement cost value (RCV) and extended replacement cost value.

Most home insurers offer all three options for policyholders to choose from.

While replacement cost value policies are the most popular, understanding each option help you choose the right balance of cost and protection in your insurance.

Actual cash value coverage

The actual cash value in a homeowners insurance policy is the market value or the initial cost of your home and personal property with depreciation considered.

Most standard homeowners insurance policies cover the replacement cost of your home's physical structure and the actual cash value of the insured’s personal property.

An insurance policy with coverage actual cash value is the least expensive to purchase, since depreciation is considered and the claim payments are generally lower.

Initial cost to buy or market value of item less depreciation for the number of years you had it.

Home insurance companies tend to calculate depreciation differently. A common method for determining depreciation takes into account an expected lifetime of an item, then subtracts a percentage of value for each year since its purchase. For example, say you bought a television for $1,000 four years ago that is expected to last 10 years.

The estimated straight-line depreciation calculation would be 1,000 / 10 x 4, which equals $400. This leaves the actual cash value of the television insured by your home policy to be $600 ($1,000 — $400).

As you can see, this means that the insurance coverage for your personal belongings will typically decrease over the number of years you hold them.

Replacement cost coverage

Sometimes called «RCV», the replacement cost value is the amount of money it would take to replace your damaged or destroyed home with the exact same or similar home in today's market.

Some home insurance policies and endorsements also cover the replacement cost of personal property.

This is generally the most recommended option, since it gets homeowners closest to their living situation before a covered peril occurred.

The replacement cost is usually calculated using the initial price tag paid for the items or the cost of physically building the home when it was purchased, regardless of any potential depreciation.

Remember, this is the value of the home or items, not the land it sits on. It's generally recommended that you get a contractor or appraiser to evaluate your house's replacement cost.

They'll know how to price the cost of the building's construction materials (such as granite, windows, or doors), any unique or valuable upgrades in fixtures or added living space (porch, entertainment space, etc.

), and come up with your house's fundamental value.

For a simple example, say you purchased a new home for $350,000. That price ly included the cost of the lot it was built on and the cost of constructing the dwelling. If the lot was priced at $50,000 you only need to insure the cost of the home, which would be $300,000. This assumes there is no market appreciation in the $350k figure.

Sometimes the replacement cost is paid in two installments. First, the insurer will pay either the actual cash value or half of the replacement cost. Then once repairs have been made and you can send documentation to the insurer, they will pay the remaining replacement cost.

Guaranteed or extended replacement cost

Policies with guaranteed or extended replacement cost coverage offer the most extensive and expensive protection. Extended replacement cost coverage is essentially an expanded version of RCV coverage, described above. This option pays the cost to rebuild your home exactly as it was before a peril — even if the cost exceeds the estimated value of the home.

What this means is that un regular RCV coverage, extended replacement cost coverage protects you against sudden increases in materials or construction costs, which can occur when a disaster strikes many homes in one area. If your budget allows for it, extended replacement cost insurance is a good option when you live in a region that is prone to natural disasters such as tornadoes.

Rather than a guaranteed replacement policy, some insurance companies offer an extended replacement policy. Instead of guaranteed cost coverage, the extended replacement option covers an additional 20% to 25% of the replacement value of the home.


What is ACV in Sales and What is a Typical SaaS ACV?

ACV - Actual Cash Value

The world of SaaS is awash with cryptic acronyms. If your business model relies on annual subscriptions, ACV will be a term that’s constantly on your mind as your company grows.

So, what is ACV in sales and what is a typical SaaS ACV? We explain all that and more, below.

What is ACV in Sales?

ACV (annual contract value) is a metric that typically represents the average annual contract value of a customer subscription. It is used by SaaS businesses that have a primary focus on annual or multi-year subscription plans.

The term ACV is often used interchangeably with “ACV bookings” (the total value of accepted term contracts), which, depending on your particular calculations, might be the same thing as ACV – or completely different.

How to calculate ACV

Let’s imagine your star salesperson signs up a new customer for a 36-month contract for a total of $180,000. Once you’ve popped the champagne and given everyone vigorous high-fives, it’s time to punch those numbers.

A $180,000 contract spread across 36 months will give you a monthly recurring revenue (MRR) of $5,000. As ACV is an annualized measurement spanning a 12-month period, you’ll need to multiply your MRR by 12. This contract will, therefore, be valued at $60,000 in terms of its ACV.

In essence, it seems identical to annual recurring revenue (ARR), but we’ll get to that shortly.

Individual businesses all have different methods of calculating their internal ACV. This may or may not take into account:

  • One-time fees (e.g. training, set-up costs) which will make the first year’s ACV in a multi-year contract higher than the following years
  • Expansion revenue from upsells/cross-sells
  • Customer churn rate
  • Calculating ACV for all contracts and adding them together
  • Calculating ACV for all contracts and finding the average value

If you take the above example of the 36-month contract with its $60,000 ACV, you might decide that you prefer to include the initial set-up and training costs as part of your calculations.

Let’s say there’s a training fee of $8,000, plus an implementation fee of $2,500 as part of the total contract. This would change the ACV for the first year to $70,500 in order to incorporate the one-time fees, but the remaining two years will still have the original ACV of $60,000.

You can see how ACV can be a confusing metric for startups to get to grips with. Plus, it’s almost impossible to gauge comparisons with other similar companies who might well be calculating things in an altogether different way than you are.

ACV versus ARR

At a glance, these metrics might seem one and the same – the total value of all completed contracts per annum. If you’re adding the values of your ACVs instead of averaging them, you will most ly reach the same figure as your ARR, just in a more roundabout way.

Zuora defines ARR as follows:

“The value of the recurring revenue of a business’s term subscriptions normalized for a single calendar year.”

Un ACV, it’s a metric that is agreed upon across the industry and shows the amount of revenue a SaaS company expects to repeat year upon year.

ARR takes stock of basic accounting principles in its calculations, primarily that:

  • One-time charges are not included
  • Only contracts of 12 months or greater in duration are included
  • Billing cycle structure is not important – as long as the subscription is longer than 12 months, the cycle timing is irrelevant
  • It can be calculated to the exact day

What is a typical SaaS ACV?

There appears to be little in the way of solid data to guide SaaS companies on what a typical ACV should be for their particular business.

Owing to a wide variety in subscription models, pricing, business-to-customer versus business-to-business sales, and company-specific calculations, most of the information available on what makes “good” or “bad” ACV is tentative at best.

A Pacific Crest survey of 400 private SaaS companies showed that there was a median of around $21,000 when it came to calculating ACV.

In this survey, 26 percent of respondents came in below $5,000 and 13 percent came in above $100,000 for the value of their annual contracts. This survey sample is small, however, and does not contain a wide enough sample of SaaS companies to represent the industry as a whole.

Additionally, these numbers should be taken with a grain of salt as they do not take into consideration the vast differences from one SaaS company to the next. A typical SaaS ACV should not necessarily be evaluated on its own as just good or bad, but rather within the context of all the other financial metrics measuring the success of the company as a whole.

According to an RJMetrics study, there is also a marked difference between business to customer (B2C) and business to business (B2B) calculations. Their study showed the average B2C customer has an ACV of $100, while the average B2B customer has an ACV of $1,080 – over 10 times higher.

How useful is ACV as a standalone metric?

ACV is one of the core metrics for SaaS companies, but it’s best looked at in conjunction with other metrics such as customer acquisition cost (CAC), total contract value (TCV), and annual recurring revenue (ARR) as opposed to analyzing a standalone metric.

A high ACV often correlates to a higher CAC, as more effort will be spent finding leads and turning them into big-ticket contracts.

If your ACV calculations look woefully low against that of other companies, it might be that your sales process has lower friction. In reality, you might be better off than your competitors as you don’t have to spend so much money and time on securing contracts.

There is no visible correlation between high versus low ACV value and company growth. Some of the fastest-growing startups (e.g. Slack) fall under the low ACV umbrella, yet they have still been able to succeed and scale at lightning speed.

In conclusion, ACV is one of those murky metrics which is hard to get a firm grip on across the wider SaaS industry. No matter how you decide to define and calculate ACV for your own business, it’s important to ensure your entire team is on board with your exact method of calculation. This will help ensure consistency and accuracy when it comes to evaluating your revenue and growth.

Additional Resources

Download our free 8 SaaS Metrics That Matter guide for a comprehensive look at the core metrics used to measure SaaS company success. Using simple examples, we’ll show you how to calculate each metric, and describe why specific indicators are important to investors.

Further Reading

Rachael Pilcher is a conversion copywriter for B2B and SaaS companies, specializing in website copy, landing pages, and growth funnels. Fascinated by technology and tacos, it’s her mission to make the world of B2B a little more human.  Connect with Rachael on LinkedIn or via her website.


Actual Cash Value vs. Replacement Cost

ACV - Actual Cash Value

Actual cash value and replacement cost home insurance policies pay out very differently. That difference can save you money.

Actual cash value and replacement cost are two different methods insurance companies use to value your personal belongings in your home. Depending on if you have a replacement cost or an actual cash value (ACV) home insurance policy, your payout after a claim varies a lot.

Replacement cost is most often the how much it would cost to replace the item today. Actual cash value is the current cost of the covered item minus depreciation. While this may sound straightforward, there’s a lot going on in the details of both. Read on to learn:

What is actual cash value?

ACV coverage pays out home insurance claims for personal property current market value. “Market value” is the amount an item would currently sell for, including depreciation. There are a few different ways your home insurance company can calculate ACV:

  • Calculate the item’s value its life expectancy. As an example, the average life span of a dishwasher is about 10 years. If your dishwasher needs replacement after five years, the ACV payout is half the dishwasher’s original cost.
  • Analyze market data. Insurers will compare the value of a used item to how much similar items currently sell for.
  • Use a pricing network. If you have an item in mint condition, an insurer that uses a network or depreciation software can see what an item of that quality goes for and pay you closer to what it’s worth.

What is replacement cost?

Replacement cost is the total amount needed to repair or replace destroyed, damaged, or even stolen property.

Replacement cost coverage pays out on your stuff at whatever the current price is for the covered item, even if it is higher than what you bought it for.

If a replacement item needed can’t be found, your home insurance company will pay you for an item of equal value. This way you can find a similar replacement. If a cheaper quality item is available, the price difference may be reflected in your claim payout.

As an example of how replacement cost works, say the $700 flat screen TV you bought four years ago was destroyed in a fire. Your insurer would pay you to get a new one of same or equal function, even if it costs more now. If your make and model of TV can be found for $600, you may be reimbursed at that amount.

How does recoverable depreciation work?

Replacement cost policies can also use recoverable depreciation. This means your home insurer can send one payment at ACV to repair or replace a belonging.

After the needed work is done, your insurer then pays the rest you are owed at replacement cost. Insurers will do this to avoid fraudulent claims.

It’s also a good motivator to spend the money received on actual replacement of an item, as you get a greater payout if you do.

Is ACV or replacement cost better for you?

Overall, A replacement cost home policy is a better value when you file a home insurance claim. Replacement cost will pay the retail cost of replacing destroyed, damaged or lost items. The advantage here can be seen in the example of personal computers.  

As an example, a $1,500 laptop you bought two years ago is going to be worth less than a new one today. If you have an ACV home insurance policy, your insurer may give you a check for $800 for the computer. You’re may not be able to find an equal computer now at that price to replace the old one. A replacement cost payout can get you a computer of equal performance.

Most homeowners go with an ACV policy due to the price difference. Actual cash value policies tend to be much cheaper than replacement cost policies. While ACV’s low cost is attractive, a replacement cost policy’s range of coverage pays you out better.

The benefits of an inventory list

If you want to get a good idea of which policy type is better for you, look over your inventory list of your belongings.

If you have a lot of stuff that would get a low payout now, Replacement cost home insurance is going to be your better choice.

If the price tag of a replacement cost house policy is an issue for you, consider raising your deductible to offset the cost. It really is worth it if a major accident happens.

Replacement cost limits

An important thing to know about replacement cost is that some types of contents are only partly covered.

Items such as jewelry and electronics usually are capped at $1,000 maximum per-item on home insurance claims.

 Other items such as art or antiques are usually capped as a group instead of as separate items. This means you could get as little as $2,500 total for your $50,000 art collection.

Home insurance riders

Replacing rare items can be a challenge whether you have ACV or replacement cost insurance. Let’s use the signed jersey of a famous baseball player as an example.

The jersey may be worth thousands of dollars to fans. However, your insurer may only reimburse you what you’d pay for the shirt. Many insurers offer special home insurance riders to cover rare possessions this.

You may also be able to get separate coverage for the item. LLC has made every effort to ensure that the information on this site is correct, but we cannot guarantee that it is free of inaccuracies, errors, or omissions.

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