You’ve probably asked yourself, how much is my vehicle worth? at least a time or two in your lifetime. But after an accident, you will not be the only one asking that question. Indeed, your insurance company will be asking that question – and you may not like the answer that they come up with. Let’s take a look at how your insurance company finds a value for your vehicle, and how that differs from the process you use to valuate it when trying to sell it.
There’s a major difference between trying to value a vehicle for resale, and attempting to find a fair value for replacement. In one case, you are the one hoping to find the very highest dollar amount that you can reasonably ask for. In the other case, it’s the insurance company trying to find the very LEAST amount they have to pay when your car is deemed a total loss.
Before we peel back the layers of how insurers do what they do (and why), it’s important to understand some of the language they use. ACV (Actual Cash Value) is the amount of money that your insurer will give to you in the event of your car being deemed a total loss. That determination is made by your insurer (not the body shop) and it happens when the cost of repair exceeds a percentage threshold of the car’s total value. That percentage threshold may be different based upon the insurer as well as the state in which the vehicle is located.
It is important to know that when determining the ACV of your vehicle, your insurer will always make every effort to give you the least amount of money possible. (A penny saved, is a penny earned… and the insurance company is all about saving as many pennies as possible – typically at your expense.)
It is also important to know that the ACV is not the same as the amount of money that you paid for your vehicle. Depreciation happens rapidly with automobiles, and it is not uncommon that the ACV is thousands of dollars less than the amount you may still owe on your loan.
Some insurers offer a “replacement cost” rider for your automobile policy. This, in essence, means that instead of ACV that factors in depreciation, they will replace your totaled vehicle with a new one of the same make and model.
Disputing the ACV
If your vehicle is deemed a total loss, and you disagree with the ACV your insurer is willing to pay, you have the ability to dispute it. The first thing you need to do is a little research on the internet regarding the resale value of your vehicle. This doesn’t guarantee that your insurer will raise the amount of money that they are willing to pay, but may give you a fighting chance at the table.
We have created a video that demonstrates a multi-layered process of discovering a fair and reasonable valuation of your vehicle that will answer the question of how much is my vehicle worth? In this video, Robert Grieve and Eric Reamer identify three ways to determine your car’s worth if it were to be sold today. We encourage you to exercise all three processes, and find an average value that you feel comfortable presenting to your insurer.
And in the end, if you cannot come to a mutually satisfying agreement, you may choose to invoke the appraisal clause within your insurance policy. This simply means that both you and your insurer may hire third-party estimators to independently establish a value for the replacement of your vehicle – and whatever they agree upon is binding to both parties. The invocation of the appraisal clause should be considered as a last resort, as it is typically considered an aggressive move on the part of the insured. It is there for your protection, however, so don’t feel like you must avoid it if you are convinced that your insurer is just trying to save thousands of dollars at your expense.
And of course, as always, if you have any questions at all about the process of determining how much your vehicle is worth, don’t hesitate to contact us directly. We are more than happy to help you figure out the process.