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How does a car insurance company determine the value of a car?

An insurance company determines the monetary value of a car by means of inspection, during which it rates its conditions, factors in its aftermarket options, and uses an appraiser. When you file a claim after an accident, the insurance provider will send an adjustor to your home or workplace so he or she can determine if the car should be totaled or if it is salvageable. After the claim is filed and the insurance adjustor has visited you, the insurance company may render a decision to scrap the vehicle. This is referred to as totaling the vehicle. A typical measurement of a car's condition is how widespread the damage is to the body. If it exceeds sixty to seventy five percent of the car's value, the car is generally considered to be a total loss.

After the adjustor has determined the fate of the car, the car is given a condition rating. A condition rating, simply defined, rates the existing condition of the vehicle. The amount of damages you ask for when you file a claim does not affect what your condition rating will be. The ratings your car can be given include below average, normal, above average, and pristine. Pristine is the highest rating your car can receive, and it is never assigned unless the vehicle was brand new. The parts of the car an adjustor considers when assigning a rating to a vehicle include the exterior body, the windshield, the engine and transmission. The interior condition of the vehicle is also taken into consideration. The aftermarket options that the adjustor will then consider next are not those of a traditional sense. They include the mileage on the car, the interior fabrics, the style of the transmission, and various accessories, such as cruise control or antilock brakes. This isn't items like a cold air intake or new rims.

After a condition rating has been bestowed upon the car by an insurance adjustor, the insurance company will contact a third party appraisal company to help determine the vehicle's value. The company will take the condition rating and aftermarket assessment into consideration when they weight your car's appraisal against other similar vehicles for sale in your location. Taking the average of three or four previously sold cars that are similar to your own, the company will then determine the car's market value. Aftermarket options, such as low mileage or a leather interior, will help to increase your car's value.

The appraisal company will then inform the insurance company of its determination about your car's value. The insurance company will subtract the cost of your deductible and the percentage of liability that you are responsible for from the monetary value the appraisal approved for the car. The insurance company will then offer you the remainder of the balance as a settlement. It may be beneficial to you to purchase GAP insurance. This form of coverage will pay for any remaining loan you may have on the vehicle after the insurance company has sent you your settlement.


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