How Does The Auto Insurance Provider Determine The Actual Cash Value Of My Vehicle?

Anyone who has ever owned a car and had it demolished while there was still a loan on the vehicle knows about the disappointment of having the claim paid for the actual cash value, and still owing a substantial amount on the loan afterwards. This leads to the question how does an auto insurance company determine the cash value of a car? If you buy a brand new car for thirty thousand dollars, drive it a month, and then are involved in an accident that destroys the car, most of us assume the cash value would be what we just paid for the vehicle a few months ago. This is false. When you purchase a new car, part of the value is the new part. Once you drive the vehicle off the lot it is no longer new, it becomes used. A lot of auto insurance companies determine the actual cash value of your vehicle based on comparisons to similar vehicles. The mileage of your vehicle, any options included, the condition of the vehicle, and the equipment it has are all included in the formula to reach an actual cash value.

Some car insurance companies may use an automated assessment program which contains many different variables, basically a computer program that does the comparisons based on the database of information. The database used by vehicle insurance providers may contain input from car dealers in the area, private sales, and crash and repair statistics. If your car is twenty years old or older, there is no cash value for it. Instead it is valued by a stated value, and your car insurance premiums are rated according to the stated value of the car. The stated value is determined by you and your auto insurance agent, to be the approximate cost to replace the vintage antique auto.

If your vehicle has been a total loss and you disagree with the actual cash value assessed for your vehicle, contact your car insurance agent and ask how the actual cash value was determined. If you do not agree, there are options available. You can appeal the claim to a superior and have it checked, but there is no guarantee that this will cause your auto insurance provider to raise the claim amount. Another option would be to file suit against your vehicle insurance carrier and take them to court. A third option is mediation, and this is generally the best route if your auto insurance carrier is willing to mediate the dispute. Many times the actual cash value of your vehicle is less than the amount you paid, and this means you will receive payment that can be lower than you expect from your car insurance carrier.

It is possible to find quality cheap car insurance by using online auto insurance quotes. If you compare these quotes you can see terrific savings available just by switching vehicle insurance carriers. It is also a good idea to carry GAP auto insurance if you still owe a loan amount on your automobile, so you don't get stuck with the loan balance after the claim is paid.