How Do Insurance Companies Value A Car

That s because a wholesaler selling used cars has a wider market and car values can differ a lot more.

How do insurance companies value a car. Car insurance companies can use their own formulas for determining your car s value or they can use a site like kelley blue book or nada to determine your car s value. How do insurance companies value totaled cars. The insurance company calculates the total loss ratio or damage ratio of the vehicle which is whether the cost of repairs exceeds the actual cash value of the car. However if you make a claim on your car insurance policy and particularly if your car has been written off your insurer will usually only consider the current market value of the vehicle.

Wholesalers don t sell cars to the general public. According to kelley blue book if you currently drive a 2010 acura mdx with 50 000 miles on it your car is currently worth 24 263 if it is in very good condition. The insurance company uses different factors to determine your car s value before deciding whether your car is totaled. Insurance companies typically take into consideration the wholesale value of a car.

Even though you won t find a fixed dollar amount on your policy to describe how much a company has to pay you for your car your declarations page will state that the carrier will only pay up to the car s actual cash value. While auto insurance is a form of property insurance a car s value is unique because it suffers a lot more wear and tear than other types of property. The current market value is the value of the vehicle on the open market if you were to sell it on that day. This value calculated and offered by your insurance company is the amount it d usually cost you to buy your exact car before the accident from a car dealership in your area.

Repair cost salvage value actual cash value. The car insurance valuation process. The total loss car value calculation is if the amount of the repairs plus the salvage value is greater than the actual cash value then the car is deemed a total loss by the insurance company. When you report a car accident to your insurance company the company sends an adjuster to assess the damage.

That means that assuming you have comprehensive and collision coverage which cover damage to your vehicle you ll be paid the value of your car before the collision that totaled it. The adjuster s first order of business is. Standard total loss formula tlf. If your car is totaled in an accident meaning the cost to fix it is more than a certain percentage of the car s value then your insurance company will pay out the actual cash value or acv of your car.

The claims adjuster from your insurance company will compare the prices of cars similar to your totaled car in model mileage make and options. These vary between companies and states.