Defining “Actual Cash Value”
Unlike our homes, we all expect that our cars depreciate in value over time. In fact, you are probably familiar with the fact that your car drops in value the second you drive it off the dealership lot. Once your car is no longer new, its resale value diminishes.
Your car insurance provider knows this, too, and that is why your car insurance policy probably contains the words “actual cash value.” What actual cash values means is that your insurer will reimburse you for your car’s actual cash value—or the market value with depreciation factored in—after an accident. In other words, you cannot expect that you will get the same amount of coverage for your 10 year old vehicle as you would have in 2005.
Actual cash value is a tool used so that your insurer can make you whole without ending up better off after the accident. After all, if your insurer would buy you a new car when your used vehicle got totaled, everyone would be asking their friends to crash into them!
When you see actual cash value in your auto insurance policy, know that it means that your amount of coverage tracks with your car’s value over time. This could be good news for you; as your car’s value drops, your premiums should, too!
You deserve to not just have good car insurance, but to actually be able to understand it. To get a great policy with great service to go with it, contact Gee Schussler Insurance Agency. We are committed to helping you get the best car insurance coverage for your specific needs in Orland Park, all of Illinois, and the rest of the country!
