What does ACV mean?
ACV stands for actual cash value. It's the amount your insurance company pays if your vehicle is totaled or stolen — based on what the vehicle was worth right before the loss, not what you originally paid or what it would cost to replace it new.
How ACV is calculated
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Based on your vehicle's market value immediately before the damage or theft
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Factors in the vehicle's age, mileage, condition, and comparable sale prices in your area
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Typically calculated using third-party valuation tools or guides insurers rely on
What this means for your payout
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ACV accounts for depreciation, so an older or higher-mileage vehicle is worth less than what you paid for it
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If you still owe more on a loan than the ACV payout, you're responsible for the difference unless you have gap coverage
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ACV is the standard payout method unless your policy specifies a different valuation method
ACV vs. replacement cost
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ACV pays what the vehicle was worth before the loss
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Most Texas standard auto policies use ACV, not replacement cost
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