For drivers that have been involved in car accidents, the accident itself depending on the severity can be traumatizing enough. But often, the trauma continues long after injuries or traffic citations. Eventually, you will have to work with your insurance provider and evaluate any damage to your car.
Regardless of if you reside in a no-fault state or if the accident is another driver’s fault, you will still need to have your auto repaired, or in worst-case scenarios, replaced. Much will depend on the type of insurance coverage you purchased and how damaged your vehicle is.
Insurance providers use a variety of considerations when determining a vehicle’s monetary value. Your car will be compared to other similar cars. Factors that influence the determined worth will include:
- the car manufacturer
- the year of the car make
- the car model
- the vehicle’s mileage
- the location where you are insured
- accident history
- number of owners
An insurance adjuster will most likely consult local car dealerships, manufacturers’ list prices, and sales data as well as one of the several companies that evaluate resale prices on used cars when deciding.
The three principal guides used when buying or selling used cars include the Kelly Blue Book, the NADA Guide, and Edmunds. Each has websites than can easily be consulted for an idea of what you might expect from your insurance adjuster.
Is the Replacement Cost a Standard Measure for Reimbursement?
No, it is not. The replacement cost is not included in all insurance policies. Generally, insurance providers will only offer this possibility for newer vehicles that are insured, and often these “new” cars can be no older than two or in some cases three years. This is due to the rapid depreciation of a car’s value.
What Is the ACV?
ACV stands for actual cash value. This amount is determined using the car’s replacement cost or current market value and then subtracting the depreciation value. Most insurance providers will reimburse repair costs, replace a vehicle, or pay you the actual cash value depending on which amount will cost the insurance company the least.
Some providers will consider a car destroyed even if it isn’t ruined, because it will cost the insurance provider less and many drivers will only opt for liability coverage rather than comprehensive auto insurance or collision coverage because they know that the ACV will be too low to be worth paying the premiums.
How Is Car Value Defined?
Several car values are commonly used, but they should not be confused with the ACV that your insurance provider will determine. These include:
Certified Pre-owned Value
This is a resale value that will be determined by third parties inspecting the vehicle. This kind of value will also come with benefits and warranties. This is usually one of the highest value estimates for a used vehicle because it brings a warranty with it.
Dealer Retail Value
This value will be determined by a used car dealer after the dealer has decided and completed any modifications or repairs necessary for resale and will include the seller’s profit.
Private Resale Value
Local market conditions together with similar cars will determine the value you expect when selling privately to a buyer acquiring privately.
Trade-in Value
This is the value that a car dealer assigns when you trade your car in for another vehicle. It will generally be lower than other assigned values.
Is Value Important for Repairs?
Yes, because your provider will send someone to inspect and evaluate the cost of repairs. This will be factored in when analyzing your policy and the damage to the car. Once the insurance provider has determined what it will pay, you can either accept the payment or attempt to negotiate a better payout.
For negotiation purposes, you should comprehend the value of your vehicle.
Is My Car’s Market Value Considered When Determining Insurance Payouts?
No, not really. The market value will fluctuate almost daily and indicates what you might receive for your vehicle at any given moment. If you are a great salesman or have a friend or family member that is, you may be able to sell your used vehicle for more than its actual cash value, but insurance providers won’t fall for the sales pitch.
What Is Stated Value Physical Damage, and Do I Qualify?
The Stated value is usually reserved for a kind of vehicle where it is difficult to determine the actual value. Watercraft, recreation vehicles, and classic cars would all fall into this category. To insure these types of vehicles, you and your insurance provider will agree to upfront on a vehicle’s worth when stipulating the policy.
Insurance providers may request an appraisal of the vehicle’s worth from a qualified, reputable, and licensed appraiser.
What If the Accident Is My Fault?
Drivers with multiple accidents can easily find themselves paying double premium rates, but this will not be the only consequence. If you have caused an accident and expect to have your insurer pay for repairs or replacement, you will need to have purchased physical damage coverage that includes comprehensive and collision insurance coverage.
Another important factor is the amount of coverage you purchase and the limits as well as deductibles included in your insurance policy. You can end up paying for repairs out of pocket.
How Can I Protect My Investment in My Vehicle?
After acquiring insurance, you will want to research price guides for your car’s worth. Also, decide early on what you hope to do with your car in the future. Do you plan on trading it in for a newer model, reselling it, or keeping it until it dies?
In the event of a car accident, evaluate the damage and what kind of repairs are necessary and consider the same factors that your insurance provider will use such as the car year and model, your location, and the auto accident and owner history. There are several online car worth estimators that can assist you in obtaining the ACV of your automobile.