What does the AAIA coverage refer to in terms of vehicle value?

The AAIA coverage refers to Actual Cash Value. This term is commonly used in insurance to denote the value of a vehicle at the time of loss or damage, taking into account its current condition and depreciation. Unlike replacement cost, which would cover the full cost of replacing the vehicle without considering depreciation, actual cash value provides compensation based on what the car was worth just before it was damaged or lost.

This means that if a vehicle is involved in a claim, the insurance company calculates its value based on factors such as its age, wear and tear, and market trends, resulting in a payout that reflects what the vehicle would sell for in its current state rather than the cost to buy a new or equivalent vehicle.