In auto claims, what is the primary basis for determining current market value?

• A. The price paid for a vehicle at a public auction.
• B. A price in an ordinary buyer–seller transaction in the current market, considering condition and mileage.
• C. The insurance company’s replacement cost for a similar new vehicle.
• D. The salvage value from a total loss.

Answer: (B)

Current market value is the price a willing buyer would pay a willing seller for a similar vehicle in today’s market, taking into account the car’s condition, mileage, options, and local market conditions. This reflects real-world depreciation and what people actually pay now, which is why it’s the basis used to settle most auto claims when determining actual cash value. Auction prices can be volatile and unrepresentative of typical transactions, so they’re not the primary basis. Replacement cost for a similar new vehicle measures what it would cost to replace with a new car, not the depreciated value of the used vehicle. Salvage value is the amount recovered from selling a totaled vehicle for salvage, not its market value beforehand.