How the Insurance Company Determines the Value of Your Auto Total Loss

If the insurance company handling your claim tells you that your vehicle has been declared a total loss, the path that the claim now takes can be daunting; filled with terminology that can be confusing. If you have found yourself in this situation, here is some insight from an adjuster’s prospective that may help you navigate through the total loss handling process.


Actual Cash Value

The Actual Cash Value (ACV) of your automobile is a term for the fair market value of your vehicle on the date of the accident (prior to being damaged, of course). The insurance company will have your auto inspected. All features and options, as well as the condition of the vehicle prior to the accident will be noted. The value of your auto will depend upon some core elements:

- The year, make and model of the vehicle.

- Any additional features or upgrades installed by the manufacturer

- Whether or not there is after-market equipment on the vehicle

- An estimation of the vehicle’s condition prior to the accident (the condition rating)

- Mileage

After collecting this information, the insurance representative will consult a third party, CCC Information Services Group, Inc (CCC), to determine a fair market value for your auto. The days of using a Kelly Blue Book value are long gone. To arrive at the fair market value, CCC will consider:

- The details listed above.

- Your address and zip code, which indicates the vehicle’s market area. (This is very important because a vehicle exactly like yours may have a higher resale value in one area, but lower in another.

- Comparative vehicles (comps); the major insurers require at least two comps. (This is also very important because they are actual examples of what a vehicle of the same make, model, year, condition etc as yours is selling for or has recently sold for.) If it is absolutely impossible for the insurance company to find another vehicle like yours, it may go with a comp that is a year newer.

The insurance company will use all of this information to come up with a figure to represent the value of your vehicle just prior to the accident. A settlement offer will be made to you based on that value. The insurance company should provide you with all of the information that went into determining the value of your vehicle. Then it is up to you to decide whether or not to accept the settlement offer.

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