After a car accident (or if your car gets stolen), one of the first steps your insurer will take to make things right is getting your car appraised. A car appraisal is the process of determining your car’s value. From there, an adjuster can assess damages and assign a dollar value to your vehicle.
Unfortunately, it’s not uncommon for people to feel cheated by the dollar amount the adjuster assigns. That’s why it’s important to know how you can determine your vehicle’s value. Then, work with your insurer to receive a fair payout. Let’s look at the steps to determining your vehicle’s value, including:
3 Steps to Determine an Independent Value
You might be anxious to know what’s going to happen with your car after an accident. Can it be repaired, or is it totaled? And how much can you expect you be compensated? To answer the first question, your insurance company sends an adjuster to do a damage assessment.
When the cost to repair your car is greater than the cost of replacing it, your car is a total loss, or “totaled.” But depending on where you live, your car can be a total loss even if the cost of repair is less than your car’s actual cash value. That’s because states have individual laws on how to calculate a total loss.
In Oklahoma, for example, a car is a total loss when repairs cost more than 60% of the car’s actual cash value. But in Georgia, insurance companies use the total loss formula (TLF) to calculate a total loss. The TLF compares your car’s actual cash value to the cost of damages plus its salvage value.
- Your car is repairable if it’s worth more than the cost of damages and its salvage value (actual cash value > cost of damages + salvage value)
- Your car is totaled if it’s worth less than the cost of damages and its salvage value (actual cash value < cost of damages + salvage value)
Your insurer uses an adjuster to determine the value of your vehicle before an accident and how much to compensate you. Getting fair compensation starts with a fair appraisal. So, if you feel like your insurer is offering less than your car is worth, here’s what you can do:
1. Calculate Your Vehicle’s Average Value
Start by doing a bit of digging to get an idea of your car’s actual cash value. The actual cash value is simply how much your car was worth — or the actual dollar amount you could’ve got if you sold your car — just before it was in an accident.
Trusted sites like Kelley Blue Book (KBB), Edmunds and NADA let you use your VIN to start your research. If you don’t know or don’t want to use your VIN, you can also start by simply searching for your car’s make and model. Then, you’ll answer several questions about the state of your car (year, mileage, style, color, included equipment, etc.) to get you as close to your car’s specs as possible.
As you start getting numbers, look for the retail value (instead of the trade-in value) for a more realistic estimate of your car’s actual cash value. You can use numbers from the source that best captures your car’s condition. Or you can calculate an average using the estimates from the sites you reviewed.
2. Notify Your Insurer of Your Calculation
Once you’ve determined a fair cash value for your vehicle, you need to contact your insurance company. Connect with your agent or a representative who can tell you where you should send a letter stating the independent value you determined in step one.
If you outline your reasons for the rate you determined, focus on why your car is worth more than the adjuster said. You can provide info on specific features or the condition of your car, which increase its value.
3. Escalate Your Appraisal (If Needed)
If you receive pushback on your independent value, start by asking to meet with your adjuster’s supervisor. Again, you’ll want to have info ready on why the adjuster’s appraisal is too low. But if the supervisor still doesn’t budge, you might be able to invoke the appraisal clause of your contract.
Most insurance policies have an appraisal clause, which requires another look at the appraisal of your vehicle. Here’s how it works: you (the policyholder) get to choose an appraiser and so does your insurance company. Then, the appraisers from each side have to agree on a third person to also serve as a neutral appraiser in case the other two can’t agree without help. The third-party appraiser has the final word on the price if the other two appraisers can’t otherwise reach an agreement.
When it comes to the world of insurance, things are rarely simple. And unfortunately, there’s no guarantee that your insurer will always have your best interest in mind. So — even if you think your adjuster is fair — it’s always a good idea to stay informed and advocate for yourself when needed.
After an accident, look into your car’s value. If your adjuster comes back with what you found, then your research will have prepared you with insight as to why. But if they come back with a number that seems too low, you’ll be prepared with all of the reasons why it’s not enough.
Think of the process as collaborative from beginning to end: even beyond the appraisal, you can insist on picking the repair shop for your car. Look for ones that specialize in your vehicle’s make.