Actual Cash Value or Fair Market Value?


Actual Cash Value and Fair Market Value

I’ll bet that no one has explained to you what I am about to explain . . .First of all, the terms Actual Cash Value (ACV) and/or Fair Market Value (FMV) are sorely lacking and ambiguous when it comes to actually helping to define the value of a private passenger automobile.  In fact, the formal definition in almost every source one can find leaves out the MAIN ASPECT that would make the definition useful.  The terms ACV and FMV are so ambiguous that they are totally meaningless when it comes to figuring out the value of your vehicle.  Don’t believe me, let’s break it down.  Start with familiarizing yourself with the “formal” definitions.

Below are three definitions for each term from well known and frequently cited sources:


1.  Actual Cash Value:  The fair or reasonable cash price for which property could be sold in the market, in the ordinary course of business, and not at forced sale; the price it will bring in fair market after reasonable efforts to find a purchaser who will give the highest price.  What is ACTUAL CASH VALUE? definition of ACTUAL CASH VALUE (Black’s Law Dictionary). (2011). The Law Dictionary. Retrieved 12 October 2017, from
2.  Actual Cash Value:  In property and auto physical damage insurance, one of several possible methods of establishng the value of insured property to determine the amount the insurere will pay in the event of laoss.  ACV is typically calculated one of three ways; (1) the cost to repair or replace the damaged property, minus depreciation; (2) the damaged propertys’ “fair market value”; or (3) using the “broad evidence rule.” which calls for considering all relevant evidence of the value of the damaged property.  actual cash value (ACV) – Insurance Glossary | . (2017). Retrieved 12 October 2017, from
3.  Actual Cash Value: In the property and casualty insurance industry, Actual Cash Value (ACV) is a method of valuing insured property, or the value computed by that method.  Actual Cash Value (ACV) is not equal to replacement cost value (RCV).  ACV is computed by subtracting the depreciation from replacement cost.  The depreciation is usually calculated by establishing a useful life of the item determining what percentage of that life remains.  This percentage multiplied by the replacement cost equals the ACV. “Actual Cash Value.” N. p., 2017. Web. 12 Oct. 2017.


 1.  Fair Market Value:  The price a buyer will pay.  All parties are willing and aware of the property and its value. What is FAIR MARKET VALUE (FMV)? definition of FAIR MARKET VALUE (FMV) (Black’s Law Dictionary). (2012). The Law Dictionary. Retrieved 12 October 2017, from
2. Fair Market Value:  FMV is an estimate of the market value of a property, based on what a knwledgeable, willing, and unpressured buyer would probably pay to a knowledgeable, willing, and unpressured seller in the market.  “Fair Market Value.” N. p., 2017. Web. 12 Oct. 2017.
3.  Fair Market Value:  Probable price at which a willing buyer will buy from a willing seller when (1) both are unrelated, (2) know the relevant facts, (3) neither is under any compulsion to buy or sell, and (4) all rights and benefit inherent in (or attributable to) the item must have been included in the transfer.  FMV is generally the basis for tax assessment and court awards. “What Is Fair Market Value (FMV)? Definition And Meaning.” N. p., 2017. Web. 12 Oct. 2017.



So, you might be saying, what is so ambiguous about the definitions?  When you read through them, they sound formal and clear enough, right?  Wrong!

Think about it. . .

EACH AND EVERY formal definition is missing a clarification of which MARKET!

closer look

Go back and look.  They don’t tell us WHICH market or even say that a market definition is required.  Now. . . Is it not true that I can sell my vehicle to a willing buyer off of Craigslist (private party market), or that  I can also sell my vehicle to a willing buyer who is a dealer (trade-in market)?  If I am a dealer can I not sell my vehicle to another willing dealer (wholesale market), or could I sell my vehicle to a willing consumer that comes to my sales lot (retail market)?  I’ve just listed four different markets for an automobile!  They will all have different values even for the exact same vehicle!

In fact, there is NO WAY to determine an accurate FMV or ACV without some further clarification of the market and type of value.  Unfortunately, claims managers and supervisors, insurance adjusters, and damage estimators (who are told by their employers that they are also qualified appraisers) have very little experience with the legal requirements for formal appraisals that prove value.  Insurance company employees follow a set of instructions from their boss, or they get fired.  Although they could, insurance carriers (except the few good ones) refuse to train their staff.  Sadly, instead of hiring an expert to train their staff, most insurance companies simply tell their claims people to “use this method” and drive home that the method they are trained to use will give them a fair ACV or FMV. Even more sad, very few adjusters will question authority (it’s in the nature of the job to follow instruction or get fired), so they simply regurgitate the false information they are trained to provide when any vehicle owner disputes the validity of their ACV or FMV figures.

Have you heard “That’s not how it works, sir/ma’am”?

Mind you, these same adjusters NEVER use an FMV or ACV that properly defines the market and type of value that they allegedly compute.  It’s corporate brainwashing / institutionalizing at its best.  The insurance carrier adjuster is afraid to ask. . .  Fair WHAT MARKET Value?  Or Actual cash value in WHAT MARKET?  They won’t rock the boat because they might lose their job.  It’s much easier to just do what the boss says and not worry about the “right” thing to do.

Even worse, in the RARE instance that an insurance company has defined a market and value it is invariably the WRONG one!  For total loss claims, carriers like to imply that the right market to measure is the private party market.  This results in LOWER payouts than if they used the proper market (retail).  In the same way, carriers like to imply that the right market to measure for a diminished value claim is the retail market.  Again, this results in a LOWER payout than the appropriate market (trade-in).

When I started Petty Details, LLC, I had already spent years researching how to properly perform an appraisal of value.  What I found out is that there are very few reliable experts and only a handful of cases and data that is reliable regarding appraisal standards.  With the help of numerous attorneys, I’ve thoroughly researched what is required if one wishes to prove vehicle value in a court of law.  I found that each State has similar rules and that if an appraiser is going to go to court and testify, then they can be challenged under various different standards (a whole other article).  Simply put, any appraiser that writes an appraisal (if they want it to hold water in court) needs to make sure they can pass the Daubert or Frye standard (or their equivalent) and that they conducted their appraisal appropriately.

Courts want to see that there is a sound method for arriving at expert opinions of value.  The method I found which was the MOST PREVELANT in the US is called the USPAP or Uniform Standards of Professional Appraisal Practice.  The IRS and most professional appraisers will require that written appraisals be developed and produced in the manner prescribed by the USPAP guide.  I got a copy of the guide and painstakingly went through it.  It is very good and thorough.  It addresses almost every problem that an appraiser might face when attempting to place a value on property (of any type).  It has standards for real property (like houses) and personal property (like an automobile) and all other types of property (antiques, profit, etc.). Insurance companies will refuse to acknowledge these formal standards.  I think it is because it helps them to make offers that are not in line with the values in the appropriate market.

If they used the standard then one of the first rules is that the appraiser must DEFINE THE MARKET! 

Here is the quote right out of the USPAP Standard 7 (for personal property):

“(b)  define and analyze the appropriate market consistent with the type and definition of value: and

 COMMENT:   The appraiser must recognize that there are distinct levels of trade (measurable marketplaces) and each may generate its own data.  For example, a property may have a different value at a wholesale level of trade, retail level of trade, or under various auction conditions.  Therefore, the appraiser must analyze the subject property within the correct market context.”

As you can see, when a formal standard for appraising value is used, then there is a requirement to DEFINE what MARKET is being measured AND to define the value (ACV or FMV).  The lack of a defined market why the reliance on simply saying they used the ACV and FMV is lacking, and in my opinion VERY misleading.

To summarize, it’s unfortunate that the lack of formal appraising knowledge is especially evident in automobile value disputes.  Because of the relatively low values that typically involved, carriers bully victims and customers.  For a dispute that is under $10000, it is exceedingly difficult to get competent help, and carriers know this.

They ignore you or simply tell you “that’s how it is ma’am/ sir,” and hope you give up.


I like proving that difficult / impossible things are only difficult or impossible until somebody makes them easy or possible.  I don’t have any quit in me.  If you have a dispute about the value of your vehicle, get the facts.  Don’t you dare believe that an insurance company is following appraisal rules when determining the ACV / FMV.  I assure you they are following INSURANCE rules, not appraising rules.  Get an expert like me to confirm whether they’re properly valuing your property.  If you’re an insurance company, get a qualified expert to help you do the right thing or the victim might find me and the team at Petty Details, LLC!

Call us immediately if you have questions.  Information is always free at Petty Details, LLC!


Total Loss Due To Flooding? How Victims Can Fight A Low Offer by Invoking the Appraisal Clause

Prove a point on your total loss due to flooding after Hurricane Harvey with the Appraisal Clause

If you’re a victim of the recent flooding in South Texas and have a total loss due to flooding with your carrier, you should call our office immediately and make sure that any offer you get is fair and reasonable.

Now that South Texas is dealing with the aftermath of Hurricane Harvey and Florida and Georgia brace for the impact of category 5 Hurricane Irma, victims will undoubtedly be dealing with total loss claims in exponential numbers and they need to know that insurance companies routinely handle these claims in a very dogmatic manner. The biggest tactic is for a carrier to simply refuse to negotiate. They will simply tell you, “take it or leave it”. They like to claim that they do not have the authority to negotiate outside of their captive company market reports.

This is completely untrue.

Unfortunately, most insurance adjusters are brainwashed by training that tells them how it is, and then they simply regurgitate the same brainwashing mantra given to them by their superiors.

The standard personal auto insurance policy in Texas contains an appraisal clause, and that clause is typically very vague. The good thing is that there is case law precedence that clarifies many of the questions that arise when either the insurance company or the policyholder invokes the clause.  Simply put, the appraisal clause is meant to get two independent appraisers to discuss and attempt to settle the value of the loss. The point is to get two people that don’t have a dog in the fight to discuss the value of the claim and see if they can come to a meeting of the minds.  Simple, right?

I’ll Pretend I Didn’t Hear That

As simple as it sounds, most insurance companies refuse to acknowledge the point of the appraisal clause like a first grader plugging their ears and throwing a tantrum. A lot of times, they will attempt to name themselves (an employee) as their own appraiser! It sounds silly, but the fact is they do it. The reason they do it is because they can. Most people simply give up when their insurance company bullies them. If you knew that you could simply steal from somebody and, even if you got caught, the most that would happen is that you’d have to give back what you stole, the only thing stopping you from stealing would be your good nature.

Trust me, insurance companies are not “good-natured”.

They are in the business of profit.

Even when a savvy victim is able to find good help on their total loss claim, the insurance company still makes profit because there are not enough people giving out good help at an affordable price when it comes to dealing with a total loss due to flooding (or any total loss claim for that matter). Attorneys will shy away from total loss claims because there is no money in them. Unfortunately, most attorneys also work for profit alone (although we have searched high and low and have managed to locate some of the good guys across the U.S.).

You must be willing to fight.

Profit or Principle?

Of course, I talk a big talk, but anybody with a brain knows that I must make money to stay in business. I do charge for appraisals if they are needed, but I primarily work on the principle of the matter. I fight so they will have to pay what is owed to the people that have been paying premiums! That feeling of elation when I prove something that most don’t believe can be done is good payment, and it makes word of mouth referrals easy to come by.  In fact, even though I do charge for appraisals when they’re needed, I routinely help people with their case for free, just to prove there is somebody who will and I ALWAYS review cases for free up front to help victims devise a plan.

Insurance companies just can’t figure out how somebody does it. That’s because they are not honest and work for money!

Those dishonest carriers who are out for profit will never figure out the trick (and they are the majority). Only honest insurance companies (yes there are a few. . . Met Life. . . Amica. . ) use my services because they are alright with getting the truth – not just the truth according to them.   The vast majority of insurance carriers hate me and I am OK with that.

Doing The Right Thing

The basis of our mission at Petty Details, LLC is to pay attention to the details and do the right thing.  We think everything else will fall into place if we focus on the simple and seemingly petty details (like doing the right thing). Insurance companies refuse to do the right thing.  Their mission is to make money by putting in place profitable claims handling guidelines and forcing their staff to abide by them.

I’ll tell you the truth whether it means you are getting free help or not.  Just call my office and we’ll discuss your claim and options. If I don’t have the answer to your question, I know somebody who does. Sometimes the answer sucks, but we stick to our guns and information is always free at Petty Details, LLC.

Call us now at 214-227-2154 or use our form below to request a TOTALLY FREE consultation with me personally to discuss your total loss due to flooding or any other reason!

Rental Car on Total Loss Claims in Texas

Rental Car on Total Loss Claims in Texas

rental on total loss claimsBlogs are buzzing because in the recent Texas Supreme Court Case, J&D Towing LLC v. American Alternative Insurance Corporation 2016 WL 91201 (Tex. 2016), a major wrong that has been going on since before there were even cars was righted.


Total Loss Settlement Tips

total loss settlement fightTOTAL LOSS SETTLEMENT TIPS

What should you do when you are dealing with a total loss?  We get so many questions every day from people involved in an accident where their vehicle was totaled and they are now getting a low offer from the insurance company and just don’t know what to do next.  We always tell them that it is always a negotiation and that they have to fight and prove their points with the information we are revealing below today!  We put together some total loss settlement tips to get you moving in the right direction on your auto claim.


Drop us a line!