馃攳
How Car Insurance Companies Value Cars - YouTube
Channel: My Fairy Tale Cartoon
[0]
how car insurance companies value cars
[3]
when your vehicle is totaled in an
[5]
accident your insurance company pays you
[7]
for the value of the totaled car all
[10]
more accurately it pays you what it
[12]
claims the value to be
[14]
nearly everyone who has been through
[16]
this process can attest that the most
[18]
frustrating part is accepting the auto
[21]
insurance company's assessment of your
[22]
car's value
[24]
almost invariably the estimate comes in
[27]
lower than you anticipated and the
[29]
amount you receive is not enough to
[30]
purchase an apples to apples replacement
[34]
sometimes it is not even enough to cover
[36]
what they still owe on the car
[38]
confounding the issue is the fact that
[40]
most customers are unfamiliar with the
[43]
methodology used by insurance companies
[45]
to value cars
[47]
the valuation methods of car insurers
[49]
are esoteric relying on abstract data
[52]
the specifics of which they are careful
[54]
not to reveal
[56]
that makes it difficult for a consumer
[58]
to challenge a global offer from a car
[60]
insurance company
[62]
knowing the basics of how insurance
[64]
companies value cars and the terminology
[67]
they use can bring you to a stronger
[69]
position from which to
[70]
negotiate key takeaways
[73]
a car insurance payout is determined by
[76]
the value of the vehicle you were
[77]
driving before the accident that wrecked
[79]
it
[80]
a standard insurance policy does not pay
[83]
you the cost of an equivalent new model
[86]
nor does it guarantee a payment equal to
[88]
the amount you may still owe on the car
[91]
replacement insurance and gap insurance
[93]
can eliminate those hazards but are
[95]
costly additions
[98]
understanding car insurance claims
[100]
valuations
[102]
when you report a car accident to your
[104]
insurance company the company sends an
[107]
adjuster to assess the damage
[109]
the adjuster's first order of business
[111]
is deciding whether to classify the
[113]
vehicle as totaled
[115]
an insurance company may consider the
[117]
car to be totaled even if it can be
[119]
fixed
[121]
generally speaking the company decides
[123]
to total a car if the cost to repair it
[125]
exceeds a certain percentage of its
[127]
value anywhere from 51 to 80
[130]
according to insured.com
[134]
some states mandate or provide
[136]
guidelines for this percentage
[138]
alabama for example sets it at 75
[142]
assuming the vehicle is totaled the
[144]
adjuster then conducts an appraisal and
[147]
assigns a value to the vehicle
[149]
the damage from the accident is not
[151]
considered in the appraisal
[153]
what the adjuster seeks to estimate is
[155]
what a reasonable cash offer for the
[157]
vehicle would have been immediately
[159]
before the accident took place
[162]
next the insurance company enlists a
[164]
third-party appraiser to issue its own
[166]
estimate on the vehicle
[168]
this is done to minimise any appearance
[171]
of impropriety or underhandedness
[173]
and to subject the vehicle to a
[175]
different valuation methodology
[178]
the company considers its own appraisal
[180]
and that of the third party when making
[182]
its offer to you
[184]
it may be possible to hire your own
[186]
appraiser if you disagree with your
[188]
insurance company's valuation though you
[190]
may need your insurer's approval to do
[192]
so
[193]
actual cash value versus replacement
[196]
cost there's a big distinction between
[199]
the insurance value of your car as
[202]
determined by the insurance company and
[204]
the amount it actually costs to purchase
[206]
a suitable replacement
[208]
the insurance company bases its offer on
[211]
actual cash value acv
[214]
this is the amount that the company
[215]
determines someone would reasonably pay
[217]
for the car
[218]
assuming the accident had not happened
[222]
actual cash value usually takes into
[224]
consideration factors including
[225]
depreciation wear and tear mechanical
[228]
problems cosmetic blemishes and supply
[231]
and demand in your local area
[234]
for example state farm explicitly
[236]
references its insurance value car
[238]
calculator we base your vehicle's value
[240]
on its year make modeled mileage overall
[243]
condition and major options minus your
[246]
deductible and applicable state taxes
[248]
and fees
[250]
before purchasing gaap insurance take
[252]
time to compare premiums and costs from
[254]
the best car insurance companies to
[256]
ensure that you get a reasonable deal
[259]
the depreciation problem
[262]
even if you purchased a kanu and only
[264]
drove it for a year before the accident
[266]
its acv will be significantly lower than
[269]
what you paid for it
[271]
simply driving a new car off the lot
[273]
depreciates it by as much as 10
[276]
and depreciation accelerates to 20 by
[278]
the end of the first year
[282]
indeed the insurance company dings you
[284]
for everything from the miles on the
[286]
odometer to the soda stains on the
[288]
upholstery accumulated during that year
[291]
the amount of the acv offer is
[294]
inevitably going to be less than the
[295]
replacement cost the amount it costs you
[298]
to purchase a new vehicle similar to the
[300]
one that was wrecked
[302]
unless you are willing to supplement the
[304]
insurance payment with your own funds
[306]
your next car is going to be a step down
[309]
from your old one
[311]
replacement cost insurance
[313]
a solution to this problem is to
[315]
purchase car insurance that pays the
[317]
replacement cost
[319]
this type of policy uses the same
[321]
methodology to total a vehicle but after
[324]
that it pays you the current market rate
[326]
for a new car in the same class as your
[329]
wrecked car
[330]
the monthly premiums for replacement
[332]
cost insurance can be significantly
[334]
higher than for traditional car
[336]
insurance
[338]
if you total your car shortly after
[340]
buying it you could wind up with
[341]
negative equity in the car depending on
[344]
your financing deal
[346]
that is the insurance payment could be
[348]
less than you owe on the vehicle
[351]
when valuation falls short
[354]
the situation can get worse if the car
[357]
is relatively new
[359]
the amount the insurance company offers
[361]
for the totaled car may not be
[363]
sufficient even to cover what is owed on
[365]
the wrecked car
[366]
this may occur if you wreck a new car
[368]
shortly after buying it
[371]
a new car takes its biggest valuation
[373]
hit when its new owner drives it off the
[375]
lot
[377]
if an accident occurs within a year or
[379]
so it's likely that the payoff for the
[381]
total car will be less than the owner
[383]
owes on it
[385]
this becomes more likely if the buyer
[387]
has taken advantage of a special
[389]
financing offer that minimized or
[391]
eliminated the down payment
[393]
while these programs certainly keep you
[395]
from having to part with a large chunk
[397]
of cash to buy a car they almost
[399]
guarantee that you drive off the lot
[401]
with negative equity
[403]
when your insurance check cannot pay off
[405]
your car loan in full the amount that
[408]
remains is known as a deficiency balance
[411]
because this is considered unsecured
[413]
debt the collateral that secured it is
[415]
now destroyed the lender can be
[417]
aggressive about collecting it
[419]
this can include seeking a civil
[421]
judgment against you to compel you to
[423]
pay what's owed
[425]
if a lender is able to obtain a court
[427]
judgment they can then pursue means to
[429]
collect the deficiency balance including
[431]
wage or bank account garnishment
[434]
the gaap insurance solution
[437]
like the replacement cost issue this
[439]
problem has a solution
[441]
you can add gap insurance to your policy
[443]
to ensure that you never have to deal
[445]
with the remaining balance on a totaled
[447]
car
[448]
this coverage pays for the cash value of
[451]
your car as determined by the insurance
[453]
company and pays for any deficiency
[455]
balance left over after you apply the
[457]
proceeds to your loan
[459]
[Music]
[468]
[Music]
[481]
you
Most Recent Videos:
You can go back to the homepage right here: Homepage