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Repair or Replacement Value
Q: Why does the insurance company repair some cars but pay the replacement value for other cars?
A: It is usually a question of cost efficiency. In the instances where the vehicle is economically impractical to repair, your insurance company will elect to replace your vehicle or reimburse you for the ACV (actual cash value). For instance, if the cost to repair the vehicle equals or exceeds the vehicle's actual value on the date of the loss, the vehicle is considered economically impractical to repair or a total loss. In many instances, an insurance company will total a vehicle if the appraised damages equal 80% of the vehicle's ACV because often, once repairs are begun, additional damages or "hidden damages" are found, which would render the vehicle a total loss by definition.