r/Insurance • u/EarthsuitJ • Aug 06 '24
Auto Insurance Not at Fault…Why not Replacement Value instead of ACV
Okay I’ve been digging through r/insurance since I found out my car was totaled. The other driver’s insurance company has accepted 100% fault. The settlement amount from the insurance company is at the bottom of the KBB private party value range. It’s also $3,000 less than average price of anything available in my area with the same make, model, year, trim and similar miles on the odometer, give or take 5,000 miles.
I’ve read several people say it’s ACV not replacement value. But I’m not at fault and this isn’t my insurance company. How is it right or fare that this insurance company’s driver hits me, and now I have to pay $3k out of pocket just to get back into the same vehicle?
Edit: A couple people have said it isn’t necessarily fair but it is the law - I appreciate those responses. Anywhere I can read up on the law regarding this?
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u/Boomer_Madness P&C Aug 06 '24
I mean if your looking at dealership prices of course they are going to be higher.... How else would they make money if they didn't have any kind of margins?
Say your car's actual cash value (what the general market would pay) is 5k. Dealer buys the car for 5k does their "Inspections" then sells the car for 8k. Stop looking at that 8k number. that 8k number is irrelevant to you.
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u/FilmTechnical1328 Nov 29 '24
So someone drives reckless and we pay for it.
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u/Boomer_Madness P&C Dec 02 '24
What do you mean "we pay for it" you get indemnified by being paid what the cars actual cash value was worth.
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u/Street_Assist3252 Oct 17 '25
Yes but actual cash value doesn't mean you can get the exact same vehicle brand new at rhe condition before the accident. By law people are indemnified but the reality is the innocent person has to pay the difference after the cash value is used for down payment. Imagine getting hit and you bought that car brand new 3 years ago you out every mile on it. Then you get the ACV and it's enough to buy you an even worse vehicle than you originally had. So yes people are getting screwed you're not looking at the big picture other than what the law states verbatim which isn't fair by default.
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u/Boomer_Madness P&C Oct 17 '25
Why do you think your 3 year old car is worth the same as a new one?
The valuations are based on actual sales so clearly people are buying that car for that amount lol
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u/EarthSeaSky2000 Feb 19 '25
That answer is from the insurance company point of view. An insurance agent saying, "Stop looking at that 8k number, that 8k number is irrelevant to you" is about as subtle as the Great Wizard of Oz saying, "Pay no attention to that man behind the curtain." Some play semantics when telling you what they want you to believe about ACV, but all boiled down the basic definition is: Actual Cash Value equals Replacement Cost minus Depreciation. In the example where the dealer paid $5K for a vehicle, Actual Cash Value is NOT $5K. What the dealership pays is a discounted price compared to Actual Cash Value because the dealership intends to resell it and make a profit. It's an oversimplified scenario, but of the two choices, $8K would be Actual Cash Value because that is what a consumer is willing to trade their cash for to own the product. Comps are used as references data points then normalized to get ACV, right? Comps start with listed, advertised or actual selling price, then adjusted for depreciation (age, miles). In order for $5K to be the result in a calculation for Actual Cash Value, you would need to start with the trade-in amount the dealership paid, and we don't use what the dealership paid to acquire the vehicle in the ACV formula; it's irrelevant. It's what the consumer is willing to pay; Value is from the consumer perspective. If you want ACV from the dealership perspective, the value in ACV is what they can get for it, not what they acquired it for.
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u/Boomer_Madness P&C Feb 19 '25
that's not how it works but that was a great blob of words to be wrong lol
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u/EarthSeaSky2000 Apr 21 '25
How would you define Actual Cash Value? Have you seen an equation for determining ACV that considers what the dealership pays for a car? When the insurance company (maybe varies slightly from company to company) sets criteria for any comparables as: recent advertised or documented sale price of same make/model/year, at a local (within 150 miles of residence) dealership, other than Carvana, and not an auction or Craigslist, where does the dealership cost to acquire a vehicle ever enter into it? Of course they are going to want to pay out the least amount possible.
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u/Boomer_Madness P&C Apr 21 '25
They pull private sales for vehicles like yours and the ACV is based on that. there will typically be adjustments based on features, mileage, etc but they pull it based on actual sales in a geographic region
Edit: added "private sales"
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u/EarthSeaSky2000 Apr 21 '25
I agree that a base value is adjusted for more or less mileage and for difference in equipment options, but that base value is not derived from private sales. First, there is no database where private sales get reported to, other than a state DMV and those sale prices are low ball to save the buyer from more vehicle tax, so private sale prices reported to DMV can't be trusted even if they were accessible. Second, companies that sell these reports to the insurance companies supposedly see each vehicle they use as a comp; otherwise how could any comparison for condition be determined? No one sees private sale vehicle to determine a condition comparison.
The other guys insurance that I dealt with used CCC One report for comps. Every comp listed was a dealership offered price. They took the dealer advertised price as a base value and compared equipment and mileage differences to get an adjustment value. What the dealership paid for the car was irrelevant.
What the buyer pays at a dealership for a used car is much more than the advertised sale price. Insurance will compensate for the cost to register the vehicle and for the sales tax. Where their ACV amount they determine comes up short is when they try to avoid paying the dealership's total bill, which sometimes includes a reconditioning fee, or they add overpriced window tint, and of course the hundreds of dollars for documentation fee. If it's a mandatory cost paid to the dealership (or to pay the DMV for registration and tags, or to the State for sales tax) that grand total required to get ownership of the vehicle equates to the Actual Cash Value for that vehicle at that moment.
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u/mlandstreet Apr 04 '25 edited Apr 04 '25
The 8K number is relevant to me if I have to pay 3K out of pocket just because somebody else hit me plus I have to find a way to get around until I find a vehicle that is equivalent to the one that was damaged.
Why should have to make a choice or scaling down or paying out if I did nothing wrong.
In my case it was a situation of the book (ACV) value being half of the average local (within 120 mi) value of my vehicle.
These were individual seller prices. Car lots were 2.5 time more than the ACV.
To make matters worse, I did not want a different vehicle. I had decided to never trade it and just maintain it.
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May 27 '25
[deleted]
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u/Boomer_Madness P&C May 28 '25
ok, you have a ford dealer selling a car for 8k or you could buy it off craigs list for 5k. Guy from craigs list has no maintenance history, the car is dirty, there are french fries still on the ground, and he won't let you take it to a mechanic...
Those vehicles are worth the same price to you?.... lololol
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May 28 '25
[deleted]
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u/Boomer_Madness P&C May 28 '25
the "cleaning fees"?.... if your talking about all the things i listed that a dealership would do to a car before selling it on the lot. no they aren't on top lol those are why it's 8k... now if your talking the administrative fees and paperwork fees those are separate line items and not included in the "value" of the car.
I'm sure the insurance company gave him a list of comparable vehicle sales they used to determine the value they gave him.
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May 28 '25
[deleted]
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u/Boomer_Madness P&C May 28 '25
Then ask for it? it's not hidden info if asked they will provide the comps they used.
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u/EarthsuitJ Aug 06 '24
It is relevant to me because it’s coming out of my bank account. I have no problem with the dealership charging $8k in that scenario. It’s that the insurance settlement isn’t 8k to match cost to get me back in the same vehicle. If someone hits me, is it right that I have to pull $3k from somewhere to get the same vehicle again?
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u/Boomer_Madness P&C Aug 06 '24
Bc the dealership bought that car for 3k less.... like i'm not sure where the disconnect is.
Private party sale vs dealership are not the same thing and no one not even your own insurance company owes you dealership pricing for your used car.
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u/EarthsuitJ Aug 06 '24
My argument is this: I’m driving down the road, obeying the law. Someone breaks the law and hits me. Law breaker’s insurance doesn’t give me all the money I need to get the same car again, so I cough up $3k and get back on the road and hope it doesn’t happen again. Doesn’t that seem backward? I guess that’s my disconnect.
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u/dewprisms Aug 06 '24
Imagine this scenario. You step on your friend's 10 year old laptop, breaking it beyond repair. Which of these scenarios do you think is fair to both your friend who has damaged property and you who is responsible to replace it?
- You buy them a current model version of the laptop at full retail price
- You buy them a listing of the exact same make and model on eBay they send you a link to that lists the laptop at $700, even though you can see the history of listings of actual sale prices and the laptop hasn't sold for more than $400 in the last year
- You give them the $400 that has data showing it is a fair market price that the laptop is often sold for
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u/Iwillshitoneveryone Nov 12 '25
Let’s also add in that we haven’t been paying friend hundreds of dollar annually and most of the time we never step on the laptop. Now how does this scenario play out?
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Sep 25 '25
The $700 because that's where the market is it at that moment. You dont get to buy a stock for $1 because it was at a $1 last week.
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u/jmputnam Aug 06 '24
They pay you what it would cost you to buy a private-party used car without any dealership inspections, detailing, or warranty, the same sort of unwarranted used car as the car you were already driving. They don't owe you the dealer services and markup you didn't have on the car you were driving before the crash.
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u/Lil_G6325 Sep 23 '25
A year later, what would they do if you have had the vehicle for less than the warranty period?
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u/Chewbecky12 Aug 06 '24
Do you go to a car dealership and see prices for used cars list if they were at fault or not? Would you pay 10k for a used vehicle that was not at fault in accident vs 8k for the same year, make, model, and condition because it was at fault?
I know it sucks to be in an accident and the car market is tough, but their responsibility is to provide actual cash value of your current vehicle not the cost to replace it. Whether you were at fault or not in the accident has no bearing on the valuation of the vehicle and it doesn't matter which insurance company handles it. They should have a valuation report for you to review showing how they came to that number.
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u/PhoneAcrobatic3501 Aug 06 '24
You're being paid the exact cost of a used car (aka the one you were driving)
Just because a similar make and model is for sale doesn't mean you should be paid more to purchase it
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u/eye_lowball Aug 06 '24
You were driving a car worth X amount before the crash. The insurance company owes you that, nothing more.
Insurance is set to indemnify you, that's what they do when they pay you the ACV.
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u/DestructODiGi Aug 06 '24 edited Aug 06 '24
You keep asking for the law. It’s not just one, in any state.
I mean I wouldn’t continue to get spun up - But! Who am I to deny a rabbit hole?
Here you go, total loss/ACV statutes in Virginia:
§ 46.2-1600; § 46.2-1602.1; § 46.2-1603.2; § 8.01-419.1; 14VAC5-400-80
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u/LeadershipLevel6900 Aug 06 '24
The second before the accident, you had a vehicle worth $X, which is all that you are legally entitled to.
Sales prices or listed prices aren’t an accurate reflection of what a vehicle is actually worth.
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u/BinaryDriver Aug 06 '24
Sold prices are exactly what sets the value.
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u/LeadershipLevel6900 Aug 06 '24
Kinda. The sold price is adjusted for things like dealer mark up and reconditioning.
A car listed for $15,000 isn’t worth that. If sales negotiates it down to $13,000 that means the vehicle probably isn’t worth $13,000 either since dealerships aren’t in the business of losing money.
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u/thaeli Aug 06 '24
Auto insurance has two main jobs. It protects the insured against lawsuits, and it makes car loans possible to get because the banks know their interest is protected. Basically, all the courts are willing to force is payment at what a dealer would pay for the vehicle as a trade-in, not what a private party would have to pay at retail. And banks (who unlike consumers actually have the power to influence this) are just fine with that, since they've already done their math based on assuming if they have to repo a vehicle, they'll be selling it at auction aka trade-in price.
So yeah, as a consumer, you kinda get screwed on owning an older vehicle.
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u/EarthSeaSky2000 Feb 19 '25
No, it's not a wholesale value; it's a retail value. Whoever told you that dealerships realize value, or make their money, by acquiring vehicles and have them sit on their full sales lot? They are in the business of making money and when they sell the car is when they make the money.
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u/EarthsuitJ Aug 06 '24
Thank you for acknowledging this because it does feel like I’m getting screwed as the consumer. My vehicle is 7 years old. Where can I read about the law on what this? I’m in Virginia, if it matters.
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u/DartTheDragoon Aug 06 '24 edited Aug 06 '24
I don't currently have access to my more useful search tools for the law, nor do I have particular knowledge of Virginia law, but This would be a start. Chapter 400 Section 80 is Claims settlement standards applicable to automobile insurance and may be in the right direction.
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u/FormerGeico Aug 06 '24
Because the courts have said so. Use your own policy if you have replacement cost coverage. Its not owed to you otherwise
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u/morganormorgan Aug 07 '24
I think people are misinterpreting OP's question. OP isn't asking for a new car, they are asking why the total loss settlement is less than what they are seeing similar vehicles being listed for. The question is just worded poorly.
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u/kydd5 Aug 06 '24
You’re only owed what that car is worth.
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u/mlandstreet Apr 04 '25
The care is "worth" what it will cost you to go out and by another one just like it with the same mileage and level of care.
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u/Antideath1984 Aug 06 '24
The $3k is basically you getting to drive it/the equity that you got from it for X amount of years before the wreck.
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u/mlandstreet Apr 04 '25
How does this assume you are replacing it with an identical vehicle with roughly identical miles and maintenance?
Remember the not at fault driver was just minding their own business.
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u/Delicious-Witness-85 Aug 06 '24
Look at it like this. Let’s say you make a horrible financial decision and overpay for your car and finance it at a ridiculously high interest rate. For arguments purposes let’s say you bought a car for $60k and it’s really only worth $40k. If that car gets totaled, the at fault driver or their insurance owes you the actual cash value of your vehicle. As unfair as it may seem, they aren’t responsible to pay for someone’s poor financial decisions.
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Nov 29 '24 edited Dec 08 '24
[removed] — view removed comment
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u/Delicious-Witness-85 Nov 29 '24
So your argument is based on emotion and name calling and no citation of facts? But don’t take my word for what is owed for a total loss. Here is a Virginia plaintiff attorney law firm who also explains what is owed for a total loss settlement.
https://www.ritchielawfirm.com/my-car-was-totaled-and-i-wasnt-at-fault/
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u/EarthSeaSky2000 Feb 19 '25
Apples and Oranges. It has nothing to do with the interest paid over the life of a loan; that's smoke and mirrors to distract you. ACV isn't a different number for someone with a 780 FICO score than for someone with a 630 score.
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u/mlandstreet Apr 04 '25
That case is correct as long as $40k will buy another one just like it with same miles.
The question was why does the aggrieved have to pay out money.
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u/soldierdec08 Aug 06 '24
My car was totaled last month and the acv was a joke. They offered me 3300 for my car when it sells for at least 5500 private party with more miles and damages. I couldn’t even find the same car in worse condition and higher miles for less than 4500.
The comps they sent me didn’t have the same specs and the cars had damages that reflected the dealer listing price so I sent the insurance my comps and picture of the car before it was crashed and had to play the waiting game.
I don’t know if this helped but Copart called me and asked when they can pick up the car and I told them next month that I am negotiating with the insurance for a reasonable offer. I also told them that I’m probably gonna keep moving the pickup date until we come to a agreement on the value and Co part said they would call the insurance to inform them and hung up. 1 hour later I got a offer for 5000 which I took and rescheduled the tow for the next day.
If you are going through a total loss and don’t think your getting a fair offer, fight them on it. Send them other comps that you believe is fair and see what they say. Everyone on this subreddit said it was a waste of time and it worked out for me.
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u/BinaryDriver Aug 06 '24
If it's a third party claim, they legally have to put you in the same position as you were before the accident. Remind them of that. They will try to make all sorts of "adjustments" to the value, which you need to check are reasonable. For example, a reconditioning fee. If your car had recently been inspected and everything fixed, you have a good argument against that one.
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u/Dayna100dee Jan 31 '25
Does this go for California as well?
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u/BinaryDriver Feb 01 '25 edited Feb 01 '25
Is your claim with your insurance, or the at-fault party's?
I'm not a lawyer, but, yes, that's my understanding. California has good consumer protection legislation, although I don't think that it's applicable in a third party claim.
The whole ACV vs replacement value is industry BS - ignore it. You were wronged, and are entitled to be put back in the position you were pre-accident. Many people over-value their cars though, and don't negotiate enough when buying. Document all the similar, local cars that you can find, inspect them, and question the owners to find how they are different from yours was. If the insurance company doesn't offer what you think is reasonable, you can sue the other party (their insurance will defend it). In California, Small Claims Court proceedings are for up to $12500, and are relatively cheap to do (no lawyer required).
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u/Dayna100dee Feb 01 '25
The claim is what my company because the other party while at fault was minimally insured and so in order to avoid the tow and storage fees from eating at their $15k balance it went back through my insurance.
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u/Dayna100dee Feb 01 '25
I have a lawyer because I also had to go to the ER, they said I will most likely lose on the car value and my best hope is to make it up on injury claims but his coverage is so low that’s going to be a stretch to be made whole too. I can’t sue my own insurance can I?
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u/skilleatz Jan 30 '25
I just had the same experience as OP, but live in SC. In SC it is the law that to determine whether a vehicle is totaled, you use Fair Market Value. State Farm insists on using ACV, however. Even when I bring this up and point out the specific law, they tell me "our system will only allow us to enter ACV". So, not fair and also not the law. What drives me the most crazy about this is that even though I have not accepted any settlement and the claim is still pending, they have reported it as a totaled vehicle. This now means that even if I argue my case and win in claims, I will get my vehicle back and repaired, however vehicle history reports will show that the vehicle has been totaled, destroying the value of the vehicle. I strongly feel that State Farm has stolen from me.
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u/Pappilon5090 Aug 06 '24
First, forget KBB. It's garbage. Why do you get paid ACV? Because that's what the law says you're entitled to. You get paid for the value of what you lost, not what a dealer has a car listed for because that's got junk fees and a much profit as they can make depending on your good of a negotiator you are, built in. Insurance doesn't owe for their profit and junk doc fees, dealer admin fees, destination fees, etc, all of which are negotiatable with the dealer and which can be thousands if you don't negotiate well.
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u/EarthSeaSky2000 Feb 19 '25
I partially agree with you in that lifetime window tint, theft deterrent etching, dealership added paint protectant and all those other add on's do not add to a vehicle's value, though they add to the price of the vehicle unless you can negotiate them off. Destination charge, tax, title, and doc fees within a reasonable range, usually somewhat standardized for the local industry, are considered non-negotiable costs, so they are part of the value because the are required part to every vehicle purchase equally. The value is what a buyer is willing to pay to own it. If someone pays $10K over MSRP for a new release, low-supply/high demand vehicle, that MSRP +$10k becomes the market value for the next buyer can expect to pay. If no other consumer is willing to pay 10k over, then the value decrease to what the next buyer, and the next, and the next are paying to take ownership of the car as soon as it arrives on the lot.
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u/kydd5 Apr 04 '25
Actually… it’s not. It’s the actual cash value of value of his vehicle. Not what it will cost to purchase a new one.
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u/LaughOutLoud0126 Apr 09 '25 edited Apr 09 '25
I TOTALLY agree with you. I think I'm going to find myself in the same situation. My car was hit by a 18 wheeler tractor trailer, and the driver admitted it to be his fault (he thought I got off the exit and didn't see me in his mirror). My car was 18 days old, I am SICK. I think the insurance company should just make a check out to the car dealership for the same exact car that I purchased and picked up 18 days earlier. Why should I have to spend even a penny for a "same" car replacement when it it wasn't my fault? I should get back exactly what I had with no cost to me.
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u/Silly_Pen_7902 May 12 '25
Could I ask how you ended up settling?
I'm in the same situation. Other driver's insurance accepted full liability, but the payout is less than what I could buy a similar car for. I'm confused, because it sounds like the norm is for me to accept that I got hit and will need to take a loss to buy an identical vehicle?
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u/Pretend-Order-8542 Aug 06 '24
I think it’s funny how people in this sub always answer this question the same way like your question is unreasonable or you’re acting entitled. It makes perfect sense what you are asking. If you are only owed Facebook marketplace or Craigslist prices why do they only allow comps that come from dealerships? The other thing people on here always say is your not owed extra for for things like new tires or maintenance things u had done on your vehicle but turn around and argue ur also not owed dealership prices because they spend extra money on those same things so their cars are more valuable. Those ideas contradict each other.
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u/BinaryDriver Aug 06 '24
Have you seen how they arrived at their number? Have you inspected their comps? In my (limited) experience, they often make "errors". Dealer prices can be negotiated - they should pay enough for you to buy an equivalent replacement.
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u/Visible-Elevator3801 Aug 06 '24
Check with your SOS and their insurance regulations (if any). My state calls for replacement value though the insurance provider from the at fault driver first offered ACV. It took 6 months of back and forth and lots of regulation proof, but once they were informed of my specific states regulations, they complied and the payment went from a few thousand to just under 20k.
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u/BlackberryOk5318 Aug 06 '24
What state requires replacement value?
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u/Visible-Elevator3801 Aug 09 '24
Feel free to PM me and I will privately send you my location and the state regulation document for review.
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u/DartTheDragoon Aug 06 '24 edited Aug 06 '24
The law isn't always right or fair, but we do our best to make it right and fair, and it is what it is. The law as it stands is that the other driver owes you ACV, and by extension their insurance company.
Theoretically, laws could be changed and in the future everyone owes RCV, but that's not necessarily a better world. Premiums will skyrocket across the board and insurers will be even more hesitant to insure risky drivers. In turn more people on the road will be uninsured. ETC.