I was driving through an intersection when a car coming from the opposite direction made a left turn - right into me! I wasn't hurt, but my five-year-old car is a write-off. My insurance company is offering to pay me what it calls "actual cash value" for the car. However, the amount is nowhere near what it would cost me to buy something similar at today's prices. Is this fair? What can I do if I disagree with the offer?
That's an unfortunate turn of events, all right! However, if the insurer determines that repairing your car would cost more than the car is worth, it can choose to write it off and pay you "actual cash value" (ACV). That's what the car could reasonably be sold for the day before the accident.
Actual cash value is the source of much confusion among consumers, because they do not know how insurers arrive at this figure, and usually think their car is worth much more than it really is.
Normally, insurance companies determine actual cash value by using a specialized software program or consulting a used-car valuation book, such as the "Canadian Automobile Red Book." If your car has very high mileage, or its body is rusting, you would be offered less than if it had lower-than-average mileage or special bodywork, like rustproofing or a new paint job. That's why it's helpful to keep your car's maintenance records, as these can contribute to the proof of value.
If you disagree with the amount the insurer is offering, do some research of your own. Check publications like "Auto Trader" and classified ads in newspapers to get an accurate idea of what your car might sell for had it not been damaged in the accident. But keep in mind that this is only the asking price, so it is bound to be higher than the actual cash value.
Once you have completed your research, if you still disagree with the amount being offered, you should present your findings - with proof - to the claims manager at the insurance company. This person is under no obligation to change the original offer, but may be willing to reconsider. Another option is to ask an independent appraiser to examine your car, but you would have to pay for that.
Your last option - if you are still dissatisfied - would be small-claims or a higher court. However, in that case, you would not be entitled to any money from the insurer until the case had been settled.
An accident like this puts a dent in your pocketbook as well as your car, since you have to dig deeper to replace the damaged vehicle. However, if insurers were to pay "replacement value" instead of "actual cash value" for write-offs, our insurance would be so expensive that none of us would be able to afford it.