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New Car Replacement: Actual Cash Value vs Replacement Cost

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By Ryan Dedrick on May 28, 2020 in Insurance Basics

When talking about car replacement coverage, the difference between actual cash value and replacement cost can be unfamiliar. Most companies that offer this coverage will pay you enough to replace your totaled car with a similar new car.

At Say, we will replace your brand-new ride if you meet a few key requirements:

1. The damage is covered under the Collision or Comprehensive portion of your policy

2. You are the original owner of the vehicle

3. The car was purchased in the past 12 months

4. It has less than 15,000 miles at the time of the accident

What if you don't have New Car Replacement Coverage?

If you don't have new car replacement coverage, your insurance decides the amount to pay. Lucky for you, the Collision and Comprehensive Coverages at Say automatically come with New Car Replacement Coverage!

What is Actual Cash Value?

We've all heard the warning, the second your car leaves the dealership it depreciates or loses value. According to CarFax, you can lose more than 10 percent of your car’s value within the first month of ownership!

Here at Say, we call ACV “comparable value” because it's a a more accurate description of what ACV provides. Basically, to find the "comparable value" of your car we look at the value of similar cars for sale where you live. We consider the age, package, and condition of both vehicles. Quick example: you and I could have the same make and model of a car, but if my seats are all torn up and there’s body damage (from before the accident) while yours is in spotless condition, your car has a higher comparable value.

What is Replacement Cost Value?

Simply put, replacement cost is the value of the car, despite the depreciation value of driving off the lot.

What is the difference between Replacement Cost Value and Actual Cash Value?

New Car Replacement coverage, if you qualify, pays you what it would cost to purchase a similar vehicle if your new car is totaled or stolen. Using Actual Cash Value pays you the value of a car that is of the same age, package, and condition near where you live. So, New Car Replacement cost doesn't factor in depreciation, while ACV does.


At Say, we always aim to do the right thing, so we automatically include New Car Replacement coverage with our Comprehensive and Collision coverages.

Be sure to take the differences between New Car Replacement Coverage and ACV coverage into consideration when choosing an insurance provider and coverage options!

Ryan Dedrick is a Manager in Home Office Claims. He is responsible for our PIP and Medical Payments Claims Department and also our Subrogation and Arbitration Department. Ryan has a Bachelor of Science in Business Administration from Columbia College. He has spent the majority of his career working in Claims and enjoys it most because he has the opportunity to help people get back to normal during their time of need.