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How is the Value of My Vehicle Determined by the Insurance Company?

Posted on behalf of Anderson Cummings on Nov 25, 2020 in Auto Accidents

vehicle appraiserIf you were involved in a serious crash and your vehicle was determined to be a total loss, you may be wondering how the insurance company will pay for the damage to the vehicle, or if you are covered for a replacement.

Below, learn more about how insurance companies determine the value of your vehicle after a crash, including the value after a vehicle has been totaled. We also discuss how GAP insurance could help you if you still owe money on your loan or lease.

Call a licensed auto accident attorney in Fort Worth from our law firm today, to discuss your legal options and see how we may be able to help you recover compensation to repair or replace your totaled vehicle.  

What Determines a Total Loss?

One of the first things an insurance adjuster will look at after an accident is damage to the vehicles involved. Your vehicle may be deemed a total loss if the cost of repairing it is greater than its cash value. If this happens, the insurance company is unlikely to offer to pay for repairs. Instead, it will pay you for the actual cash value of the vehicle. The actual cash value (ACV) of a vehicle is the cost the moment before your accident happened.

Once the insurance company determines the ACV of a vehicle, they can decide if it is worth repairing or if the damage to the vehicle is too great and make an offer for a settlement.

How is ACV Determined?

Insurance adjusters consider several factors to determine a vehicle’s value, such as:

  • Age of the vehicle
  • Mileage on the vehicle
  • Features and options on the vehicle 
  • Its pre-loss conditions

One common misconception about how insurance companies determine the actual cash value of a vehicle is that they simply use a source like Kelley Blue Book. Insurance companies make their own determination about a car’s value. They may factor in an evaluation from a third-party company they hire.

While it is in the insurance company’s best interest to lowball you, they usually assign an appropriate value to vehicles that are a total loss.  

Cash Value vs. Replacement Cost

When an insurance company pays you the actual cash value of your vehicle after it is totaled in an accident, you are only getting paid for the value of your vehicle before the crash. This could be significantly less than what you first paid for the vehicle. If you bought your car a short time before the crash, there is a good chance the amount the insurance company pays you will not be enough to cover the loan you took out to buy the vehicle.

However, if you have new car replacement coverage, the insurance company will pay you whatever it would cost to replace your vehicle. Texas does not require drivers to purchase this kind of insurance, but some insurance companies may offer it as an add-on.

Why GAP Insurance May Help

If the insurance company does not pay you enough to cover the balance of your loan or lease agreement and your vehicle is totaled in an accident, you may still be financially responsible for what is left on your loan or lease.

This is where Guaranteed Auto Protection, or GAP, insurance comes in handy. GAP coverage pays the difference between what the insurance company pays for the vehicle and what you still owe to the lienholder who financed or leased the vehicle to you.

Tips for Disputing the Insurance Company’s Vehicle Evaluation

If you believe your vehicle’s actual cash value is more than what the insurance company is telling you, you may be able to dispute it. For example, if you made modifications to your vehicle that you believe increased its value, you could show them photographs, receipts and other documents to prove those upgrades and what they cost.

We Are Prepared to Help. Call Today

Our attorneys have decades of combined experience negotiating with insurance companies and are prepared to help you get the compensation you deserve.

We do not charge you anything upfront while we build your case and you do not owe us anything if we do not recover compensation on your behalf.

Call us today at (877) 920-9009. We are here to assist you.