Actual cash value
- Pre-loss market value, after depreciation
- Standard for most total-loss vehicle claims
- Based on comparable sales, mileage, condition
- Your loan balance doesn't change the figure
Insurance
Actual cash value vs replacement cost
When your car is written off or your belongings are damaged, the wording in your policy decides if you're paid what they were worth or what it costs to replace them.
The short answer
Actual cash value (ACV) pays what the item was worth just before the loss, after depreciation for age, mileage and condition. Replacement cost pays what it costs to buy a comparable new item, often only once you've actually replaced it. Most car write-offs are paid at ACV. Replacement cost is more common in home and contents cover, or as an add-on for newer cars.
At a glance
Replacement cost
- Cost of a comparable new item
- Common in home and contents policies
- Often paid in two stages, after you replace
- Limited by policy terms and limits
| What differs | Actual cash value | Replacement cost |
|---|---|---|
| How value is set | Pre-loss market value or depreciated value | Cost of a comparable replacement |
| Depreciation | Deducted | Paid, or held back until you replace |
| In car claims | The usual total-loss basis | Only with a new-car replacement add-on |
| Evidence that helps | Comparable listings, service records, upgrades | Replacement receipts and the policy wording |
| Common dispute | Poor comparables or unfair condition deductions | Deadlines and conditions for replacing |
If your car is written off
Insurers usually value a total-loss vehicle at actual cash value, using a valuation report built from comparable vehicles for sale or recently sold. The first offer is often negotiable. To challenge it:
- Ask for the full valuation report and check each comparable: same trim, similar mileage, local market, dealer versus private sale.
- Find your own listings for comparable vehicles and send them in.
- Show condition with service records, recent tyres, a new battery or bodywork.
- List options and upgrades the report missed.
- Check whether your policy has an appraisal clause, which many US policies include for valuation disputes.
If you owe more on the loan than the car is worth, the insurer still pays ACV. Gap insurance covers the difference if you have it. In the UK, write-offs are paid at market value and the car is given a category, such as S or N, depending on the damage. In Ontario, an optional endorsement (OPCF 43) can remove the depreciation deduction for newer vehicles.
How replacement cost pays out
With home and contents cover, replacement cost policies commonly pay in two stages. You first receive the actual cash value. The held-back amount, called recoverable depreciation, is paid once you replace the item and send receipts, often within a set time limit. If you don't replace it, you may only ever get ACV. Many UK home contents policies offer new-for-old cover for most items, with exceptions for things like clothing.
Example
A driver's three-year-old SUV is written off. The insurer's report compares it with base models that have higher mileage. She sends three local listings for the same trim with similar mileage, plus receipts for new tyres fitted two months earlier. The insurer revises its actual cash value figure upward.
Common questions
Is actual cash value the same as market value?
Close, but not always. For cars, ACV is usually the market value just before the loss. For other property, some insurers calculate it as replacement cost minus depreciation, which can come out lower than what the item would sell for.
How do I dispute an actual cash value offer on my totaled car?
Ask for the valuation report, check the comparables, and send your own evidence: similar local listings, service records, recent repairs and upgrades. If that fails, check your policy for an appraisal clause or complain to your regulator.
Will replacement cost insurance buy me a brand-new car?
Only if your policy includes a new-car replacement add-on, and these usually apply only to fairly new vehicles. A standard auto policy pays actual cash value for a total loss.
What is recoverable depreciation?
The part of a replacement cost payout held back until you actually replace the item. You get actual cash value first, then the rest once you send proof you've replaced it, usually within a deadline in the policy.
Last reviewed September 2026. General information, not legal advice.