When your car is valued by an automobile company, your car insurance provider pays you for the evaluated car's value. You can direct this amount toward the money you still owe on the valued car, or you can invest it for purchasing of a new vehicle.
Everyone who has been through this procedure agrees that it is the most frustrating to accept the value of your car evaluated by your car insurance company. The evaluated value of your car comes much lower than what you estimated, which is not at all sufficient to purchase a new car. In many cases it is less than what they still owe on the car. Considering the fact most car owners are clueless of the methodology and terminology used by insurance companies to value cars. The valuation methodology of the car is esoteric, rely on abstract data, the specifics measures of which they are very keen not to reveal. This measures and methods make it difficult for a car owner to raise question on the low offerings from a car insurance company. However, knowing the criteria and terminology up on which the insurance company evaluate the value of cars will help you to understand and estimate the real value more accurately which to negotiable. Read the Valuation Process of your Car When you inform insurance company about your car accident, the company fixes your appointment with an adjuster who assesses the damage of your car. The very first step involved in this procedure is determining whether your car needs valuation. Your insurance company may find it necessary that the car need to be valued even if the damages can be fixed. Generally, the insurance company evaluate a car, in case the expense to repair exceeds 60 to 70%, of its total value. Once the car is totaled, the adjuster then move forward with an appraisal and mention a value to the vehicle. The damage occurred due to an accident is exclusive from the appraisal. Now, the adjuster estimates what nominal cash offer for the car would have been immediately before the accident occurred. Next, the insurance company allows a third-party to claim for its own estimated repair expenses incurred on the car due to the accident. This is measure is take to minimize any appearance of underhandedness or impropriety and to allow the car to go through a different valuation methodology. Actual Cash Value Vs. Replacement Cost I am sure now you wish to know that why there is a difference between actual cash and replacement cost. Here is an answer to this question. There is a huge difference between the value of your car as valued by the insurance company and the actual amount that will incur to purchase a new car. The insurance company offers benefits on the basis of actual cash value (ACV). This amount is determined by the insurance company for someone who reasonably bear for the car, assuming the time before accident. Therefore, the value is considered as depreciation, wear and tear, cosmetic blemishes, mechanical problems and supply and demand in your locality. Even in case you buy a new car and only drove it for a year before the accident took place, its ACV will be less than what you paid for the car. Hope this article has helped you to clear the methodology used to value the car. Now consider the above factors to estimate the value of you car from your end. For further assistance you can also take help from insurance agent or broker. They will help you to understand the terminology and methodology in a better way.
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