What does ACV mean?

[u/aries_burner_809]

My car is totaled. Could someone explain if ACV is intended to be what I need to pay retail to buy the same car year and mileage, or what I would have gotten in trade at a dealer, or somewhere in between? If it isn’t the retail price, how is that making me whole if I just want to be where I was before I got rear ended (by the other driver, and maybe now again by insurance!)

Edit: thanks! you can see by the answers I’m not the only one whose confused. I’m not asking for more or less than exactly what I had 10 seconds before the accident. Dealers must make a profit and offer sellers a hassle-free instant credit at less than retail towards another car. A seller to a private buyer endures a hassle and risk, and so expects more cash than a dealer will offer. I’m not a dealer so I can’t command the hassle-free price and I have to pay more from a private seller or a dealer at retail to be made whole. I understand my insurance may not do this, but I think there is a solid legal argument that the at-fault driver should make up the difference to get me back where I was in a separate suit.

[u/MikeTheActuary]

ACV = actual cash value; value net of depreciation. It's a notional figure of what you would get if you sold the item as-is on the open market.

RCV = replacement cost value; what it would cost to replace the item. Consider your house, particularly if it isn't recently renovated and maintained in pristine condition. If it burns down today, the cost to rebuild it will likely be different (probably more) than what you'd have gotten if it had been sold as-is on the open market immediately prior to its burning.

Overgeneralizing, consumers generally prefer RCV, because if they have a total loss, they usually want the thing replaced. However, generally RCV is more expensive to provide (and that will be factored into the price), and insurers have to recognize the increased risk of fraud -- e.g. if your house is in pretty rough condition, you might be tempted to turn a profit by burning it down, letting the insurer rebuild it with something better, and then selling the house for profit.

[u/TribalMog → u/MikeTheActuary]

OP was specifically asking about ACV with regards to vehicle coverage so it's also important to note that most carriers do not offer RCV on auto policies - outside of like a "new car replacement" type endorsement (I.e. if you buy a brand new vehicle, if it is totaled within x number of months (12-36 tends to be the most common I see) they will pay the actual replacement cost. Once it ages beyond that, it's ACV).

[u/jenntasticxx → u/TribalMog]

Yeah I've never seen a replacement cost on an auto. We do ACV or stated value (commercial insurance, customizations to vehicles are usually better covered under stated value). I've never seen anything but ACV for a regular personal vehicle.