How Is The Value of My Car Decided?

How Is The Value of My Car Decided

How is the value of my car decided? Sarah was in her first accident.  Unfortunately, for a first accident, it was rather severe.  Understandably, Sarah wondered if her insurance company was going to fix her car, replace it, or even make her do something else.

Of course, it would be up to Sarah’s insurance company to decide whether to repair her car or to write it off as a total loss.  If the company were to write her car off, it would use its book value to determine its worth.

To determine her car’s book value, Sarah consulted the Blue Book, which is available from the Kelley Blue Book or from the National Association of Automobile Dealers.

As you can imagine, most insurance companies will not pay to repair a vehicle if those costs would exceed the vehicle’s book value.

As a first step after the accident, Sarah’s insurance company had her meet with a claims adjuster.  Her adjuster assessed the damage and then estimated the cost to repair her car.

Just to be sure that this was a realistic estimate from the adjuster, Sarah then got an estimate from her own regular mechanic.  She was relieved to discover that (under most insurance policies) her insurance company could not force her to use any particular shop to repair her car.  Sarah wanted her mechanic to do the work.  However, her insurance company required Sarah to get yet an additional estimate on the cost to fix the car.

The second estimate came in lower than what her mechanic quoted her, but based upon his explanation, Sarah believed the higher cost was necessary to adequately fix her car.  However, she was dismayed to discover that her insurance company would only agree to pay an amount equal to the lower estimate.  Sarah then went to her claims adjuster and argued for the higher amount, using the rationale that her mechanic had given her.

If Your Car is Really Valuable

In the case of your car being declared a total loss by your insurance company after an accident, it may be possible for you to get a settlement that is in excess of the Blue Book value of your car.  However, you will need to submit documentation such as:

  • A written statement from your mechanic
  • Service history
  • Mileage records

How to Keep Up the Value of Your Car

CarMax, the nation’s largest retailer of used cars, offers these ten tips to get the most from your vehicle’s value:

  1. Stick to the vehicle’s regular maintenance schedule — and keep all records/documentation of maintenance performed.
  2. Target a reasonable amount of mileage per year on your car. Where possible, avoid driving more than 10,000 to 12,000 miles per year.
  3. Keep the interior and exterior clean. Don’t neglect the carpet, floor mats or headliner.
  4. Don’t smoke in your car. Smoking narrows the resale market for a vehicle since it is difficult to remove the smoke smell.
  5. Avoid eating in your car. Food and drink may damage the interior by leaving stains or unwanted odors.
  6. Repair scratches and dents in a timely manner — if left alone, they may lead to rust or other expensive damage.
  7. Ensure all major mechanical systems are in good working order. Make any needed major repairs before attempting to sell your vehicle.
  8. Avoid customizing your car. Adding after-market accessories can often lower the market value for your car by narrowing its appeal.
  9. Don’t paint or detail your car with wild colors. Non-standard colors may lower the vehicle’s value.
  10. Drive carefully to avoid accidents. Serious accidents that compromise the structural integrity of your car will significantly reduce its market value.

A good tip: realize that insurance needs and laws surrounding the value of your car are complex. Insurance coverage varies wildly from company to company. Laws are vastly different from state to state. Your independent agent is educated as to the law and has a wide range of companies to provide coverage options.

Don’t try to handle your insurance without an agent you trust.

Other Enhanced Insurance articles related to Auto Claims:

Bodily Injury in a Car Accident; Are You Covered

What to Do after a Hit and Run Accident

Salvage Value of My Vehicle

Options When Your Car Is Totaled

Who Is At Fault in a Car Accident

What to Do After an Accident

Who Decides What Will Get Fixed on My Car

What Does It Mean when a Car Is Totaled

How Much Will It Cost to Fix My Car

What Does It Mean when a Car Has a Salvage Title

What Do I Do If I Am Dissatisfied with My Auto Insurance Claim

My Car’s Market Value

Enhanced Insurance is not written by attorneys. If you’re looking for legal advice, you need to contact a lawyer. Further, insurance practices and forms change constantly and are varied from state to state. For definitive answers in your area, contact a local agent.

While the majority of people want an agent involved in their purchase of insurance, many people want to see if they can save money by buying direct from the insurance company. Others want to try a direct quote to make sure the premium they’re now paying through their local agent is fair. If you want a quote for your coverage, click on the competitive quote button on the right side of this page.

For more about market value of your car >

Jim operates an insurance agent network called Insurance Partners, aggregating agents in the Midwest for over 25 years. He was National Agent of the Year for Metropolitan in 1993 and Midwest Agent of the Year for Travelers in 2011. He served as a founding board member of the Surplus Lines Association of Minnesota.

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