In the last post, I described how your insurance company might determine if your car was damaged in an accident. It is important to understand how your insurance company determines the value of your vehicle.
The process of determining your car to be a total loss can be complicated. If you find yourself in this situation, I want to give you some insight from an insurance perspective.
Remember that if your car is declared total loss, your carrier will pay you the actual cash value or fair market price for your vehicle. Understanding that, we want to be sure you are armed with solid & reliable information in the unfortunate event you find yourself in this situation.
The Value or ACV Process:
The ACV or Actual Cash Value of your vehicle is a term that is meant to demonstrate & prove what the fair market value of your vehicle is on the date of the accident. Your carrier will have your car inspected, noting all options & features as well as estimating the condition of the vehicle prior to the accident. Below is a brief list of some key factors that can affect the value and condition of your car.
- Year, make & model
- The manufacturer may offer features or upgrades to the car
- Is there aftermarket equipment on the car & if there is, does it add or detract from the market value
- Condition rating: This is an estimate of the vehicle’s pre-accident condition
- Mileage (as we all know can have a significant impact on value)
The insurance company will then use CCC or another third party to determine the car’s fair market value. Below is a brief list of the things that a 3rd-party will consider when estimating the car’s worth:
- All details of the vehicle are noted above
- They will need your zip code to determine where you are located.
- Comps: Insurance companies will need at least two solid comps
Important: Where you live matters. Vehicles can have different prices depending on where you live. This is because the market (or where you live) will determine what cars like yours would sell at the time of the accident. The comps are the way a value or price is determined. It is intended to show what a vehicle similar to yours in its pre-accident state, with the same make/model/year, condition, and features.
There are not many vehicles that look exactly like mine in my area. This is a common question. In this scenario, most of the time the insurance company will then look for a vehicle that is a year newer than yours with similar features & in similar condition. In this instance, it is not allowed to use an older vehicle for a comp.
What happens if I don’t agree with the value of the product?
This is often the most difficult part of settling a total loss claim. I disagree with the valuation my adjuster gave me. You can still navigate the process with accurate and reliable information. Here are some ways to do it:
- Request a copy
- Take a look at the details and make sure it represents your vehicle.
- If you are not satisfied with the value, do some research to find other comps. Send your supporting information to your carrier.
- If they refuse to move, inform them that you are disputing the valuation.
- Ask your insurance company to pay the “undisputed amount”.
- Your insurance company will receive an independent appraisal.
- The two of you will then get together, compare the valuations, and finally reach an agreement.
I’m sorry, but you have some more questions. Let’s get to those:
- What does it mean to say “undisputed amount?” The undisputed amount is what you mean by “non-disputed amount”. Most insurance companies won’t allow your claim to be halted if you have rental coverage. If you are renting a car, they will extend your rental period for a few more days if you accept their offer to pay your total loss. Undisputed amount: If your car is valued at $20,000, but you feel it has a market price of $24,000, but you don’t dispute that it is worth at most $20,000. You accept the $20,000 and continue the process. You can still collect more money, but this is enough to get you something now.
- If you are unable to agree on the car’s worth and want to proceed with that decision, you will have your own independent market valuation. There are some great companies out there to help you, such as http://www.iada.org/.
To resolve such a dispute, I recommend you contact your insurance company directly. This is a negotiation that relies on both subjective and objective supporting evidence. Insurance carriers will work with you to settle your claims.
Additionally, I recommend that you carefully review your policy prior to proceeding with the dispute route. This will ensure you fully understand your policy as it pertains to this type claim. There are subtle differences between policies and companies. Your claim will be governed by your policy so it is crucial to fully understand it and your rights.
You can also refer to your state’s Department of Insurance site to see if your state has specific rules and laws as it relates to the handling of a first party total loss claim.
In summary, you should now have a better understanding about how value is achieved and a clear idea of what to do if you disagree with that value. You must be able to provide solid information to support your value dispute with your company if you want them to take your case into consideration. Remember, this is a negotiation. Be calm and thoughtful with your arguments and information. I almost guarantee that it will result in a fair resolution to your total loss claim.
Marc Berry has over 8 years experience in auto insurance, having worked at 2 of the most respected and reputable insurance companies in the country.
Marc’s site allows you to obtain free auto insurance quotes from one of the nation’s top providers.