there are three types of vehicle coverages. stated value, agreed value, or actual cash value. stated value means that you state a value X to them. then in the event of a loss they will pay the less of: X, repair up to X, or actual cash value. having the actual cash value option in there is where they fuck you because they can settle your loss for less than the stated value. agreed value is where you and the insurance company agree on the value of the vehicle. this would be used for like a classic car or something. the "book" value of a 50 year old car may only be a few thousand dollars, but the collector value of it can be tens or hundreds of thousands. so you and the agent both agree on a value, and that is the limit of liability. (the max they will pay out) actual cash value is what the vast majority of everyday cars, bike etc are on. my car is on an ACV policy, and yours probably is too. this means they pay you the actual cash value of the car. they dont give a shit what you PAID for the car, they only care what its value is. i could go out and pay someone a million dollars for a 2001 civic, but if it gets stolen (on an ACV policy) they arent going to pay me back a million dollars. they are going to say a 2001 civic is only worth 5000 dollars, and thats what you get. if they used what you paid for the car to determine your payout then it would be in everyone's interest to pay as much as they could for their car, no matter how crappy it was. also, that would mean if there was a loss on the car my dad gave me, the insurance company wouldnt pay anything.