How Vehicle Values and Claim Awards are Determined

March 4, 2016

When it comes to determining a car's value for insurance purposes, there are several guidelines to help. Vehicle owners and insurers can use books such as Kelley Blue Book to help determine an accurate value. Insurance companies usually refer policyholders to a claims adjuster when they file claims. In addition to verifying the loss, the adjuster will determine the cost to repair the vehicle. This estimate should be used in comparison with a mechanic's estimate.


A good insurance company or adjuster will not expect a policyholder to sign any form of agreement to pay what the adjuster deems as fair. Agreements are typically made after the policyholder receives one or more estimates from mechanics, compares them to the adjuster's estimate and makes a decision about whether the adjuster's amount will cover the necessary repairs. Policyholders should never feel pressured into accepting the adjuster's estimate when it is not sufficient for covering all necessary repairs.


Insurance companies do not typically tell policyholders where they should have their repairs done. However, they may insist that a policyholder seek more than one estimate to avoid paying a hefty bill and to protect the policyholder from being ripped off. In many cases, price-gouging shops can be identified this way. Policyholders are responsible for seeking out their own estimates and finding a reputable repair shop. When there is more than one estimate given, the insurer often chooses to cover the lowest estimate for repairs. If a policyholder is unsure about that offer being sufficient enough to cover the repairs, he or she does not have to accept it.


Betterment is when a vehicle's repairs actually enhance its value. When this may be the case, insurance companies usually opt for lower bids and require used or refurbished parts for some repairs instead of new parts. In those cases, the insurer has a legitimate reason for reducing the amount of a policyholder's claim. However, the insurer will explain this if it is an issue.


It is the insurance company's job to ultimately decide whether to call the vehicle a total loss or agree to pay for repairs. If the cost of repairs is more than the vehicle's value, the car will be called a loss. Some policyholders may argue that certain parts of the vehicle were more valuable. If this happens and the policyholder wants to receive a higher amount than book value for the loss, he or she must submit several forms of proof. This includes service history, mechanic affidavits to show added value and mileage records. As a rule, policyholders do not receive more or less than market price for a vehicle that was declared a total loss. To learn more about this topic, discuss concerns with an agent.


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