Insurance companies determine your car's value based on its Actual Cash Value (ACV) at the time of a total loss claim. This isn't the same as your car's purchase price or its private sale value. Instead, ACV is calculated as the car's replacement cost minus depreciation, which accounts for age, mileage, and wear and tear. The primary method insurers use is data from third-party valuation sources that analyze recent sales of comparable vehicles in your local market.
The specific factors that influence this valuation are extensive. Your car's make, model, model year, and trim level are the foundational elements. From there, insurers drill down into your vehicle's specific condition and features.
| Valuation Factor | Examples & Impact on Value |
|---|
| Mileage | A 2019 sedan with 120,000 miles is worth significantly less than an identical model with 30,000 miles. |
| Overall Condition | Dents, scratches, interior stains, and tire tread depth can lower the value. |
| Vehicle History | A clean report is ideal. A history of accidents or salvage title drastically reduces value. |
| Optional Features | A premium sound system, sunroof, or advanced driver-assistance packages can add value. |
| Local Market Data | A 4x4 truck may be valued higher in rural Colorado than in an urban coastal city. |
| Pre-loss Modifications | Most standard policies do not cover aftermarket parts like custom wheels or performance chips without a separate rider. |
After an accident, the insurance adjuster will conduct a vehicle inspection to assess its condition. They will then use a computerized system that pulls data from sources like CCC One, Mitchell, or Audatex, which compile information from dealership sales, auction results, and private party transactions. The system generates a report listing comparable vehicles recently sold in your area, and your car's ACV is derived from this data.
If you disagree with the insurer's valuation, you have options. You can present your own evidence, such as listings for similar cars for sale in your region. Most policies also include an appraisal clause, which allows you and the insurer to hire independent appraisers to reach a binding valuation.
