The Kelley Blue Book is considered to be a helpful resource for determining the monetary worth of a car, but it is not a definitive guide. Determining how much a vehicle is worth is an important part of the process of paying a total loss claim, and it involves a fair amount of research. If a motor vehicle is considered a total loss after an accident, an insurer will only cover up to actual cash value (ACV) of the car the moment before it was totaled.
When determining the price of a car, insurers can employ several different research methods. Insurance companies can do any of the following:
- Obtain quotes from local, qualified dealers for cars that are the same year, make, and model as the insured automobile
- Average the cost of two or more comparable cars on sale in the policyholder's area within the past 30 days
- Go off of estimates provided by several nationally recognized guidebooks
- Use a combination of the three previously mentioned methods
From this information, the insurer will produce what it believes to be the ACV of the insured vehicle. In most states, the insurer can actually be required to inform the policyholder of how it determined the ACV.
While investigating the value of a car, insurers will also take into account the condition of the automobile before it was totaled. In this process, insurers take into consideration any special features the car is equipped with, mileage, and options that could impact the ACV. During the appraisal process, an insurer will commonly list the quality of a car as above average, normal, or below average. Often the rating of "exceptional" is reserved for new automobiles that have suffered little depreciation.
Disagreements between Auto Insurance Companies and Policyholders
Sometimes even the [best car insurance] companies come to disagreements with policyholders on the price of an insured vehicle. If motorists disagree with the ACV produced by their insurer, they may be able to demand an additional appraisal at their own expense. To do this, both the motorist and the coverage provider hire separate appraisers, who then hire a third appraiser to act as a mediator. The two appraisers will then review the claim and come to a binding agreement on the ACV of the insured automobile. If any disagreements persist, policyholders can file a complaint with their state's department of insurance or file suit against their insurer.
When damage to an insured automobile is covered under a motorist's comprehensive and collision coverage, they may not receive the total ACV amount because it may still be subject to a deductible, depending on how the policy is set up. For example, if a totaled car is valued at $9,000 but the policyholder has a $1,000 deductible, the policyholder may only receive $8,000 for the now-defunct motor vehicle. Having a higher deductible set for comprehensive or collision insurance policies means less money being paid by the insurer for the claim.