Actual Cash Value vs. Stated Amount

Insuring your car, motorcycle, and especially classic/ specialty/antique cars can be confusing because how you cover the car depends on how you’re going to use it. If you’ve never owned a classic before, you may not know the right questions to ask your insurance agent. “To the beginning.  Insurance policies can be a difficult to read and almost impossible to understand; especially if you are not familiar with industry terms and weren’t fully educated on your policy coverage prior to purchase. At ICNJ, we work tirelessly to help clarify the insurance coverage that applies to the physical damage coverage you have.  There are two types of coverage you can purchase that would be used to value your property at the time of loss. 




Most are insured for Actual Cash Value, and this would be the way the cars you drive every day and have insured on a standard personal auto policy are covered for loss or damage to the vehicle. If you have a total loss, the adjuster will determine what the car was currently worth just prior to the loss, and this is the amount you will be paid for the car (minus your deductible).




This consists of the cost of the item when it was new, minus depreciation. If someone buys a brand new car for $10,000 and crashes it a week later, the insurance company is likely to pay out almost the full face value, recognizing the fact that depreciation was fairly minimal. On the other hand, if the car is ruined 10 years later, the insurance company might determine, after evaluating the car, that actual cash value at that point might be $1,000 USD. This payment would allow the policyholder to replace the damaged car with one of comparable quality: a 10 year old car with similar mileage.


We cannot stress enough how important it is that you understand how you are insured on the policy you have purchased. You do not want to find out after something happens that you did not have the right coverage.  Call us today; together we can figure out which type of coverage is right for you.