What is owed after a car is totaled: ACV or sale price?
Coverage Q&A: After a van was destroyed in an accident, its actual cash value totaled $9,000 more than its sale price.
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Question: Our insured’s customized 2013 Dodge Caravan was totaled in an automobile accident on Aug. 30, 2019. The CCC Valuation for the van came in at $37,237.09.
The insured has coverage for the customized equipment. However, he only paid $28,000 for this van two years ago. Would we owe on the CCC actual cash value total of $37,237.09, or would we owe on what he paid for the van two years ago? There is a $9,000 increase.
— New York Subscriber
Answer: The standard ISO policy states that the amount paid will be the lesser of the actual cash value, or the amount necessary to repair or replace the vehicle with like kind and quality.
While the principle of indemnity is to restore the person to whole, and they are not to profit from their loss, the policy does not address the insured having gotten a good deal on his purchase.
While it’s unlikely the vehicle appreciated that much in two years, it is possible the insured got a good deal. You can cross check CCC against the NADA guides or a blue book, but if the CCC valuation shows comparables in the area at that price, then that is what should be paid. It may be that these vehicles are more expensive now in that area for whatever reason.
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