How Do Car Insurance Companies Estimate the Value of Your Car, Truck or SUV?

If your car, truck or SUV is ever stolen or is involved in a serious accident, there will no doubt be one very serious question on your mind that you had never thought of before. How much is your vehicle really worth? As you know, the minute you drive any new car off a dealer's lot it loses a substantial amount of its value, but there are more factors that determine your ride's worth than merely just depreciation.

First off, say your car is in a serious accident, and it is at a vehicle repair shop to get fixed. Your insurance carrier will send an appraiser out to look at the damage to your vehicle well before any repair work gets started. Sometimes these appraisers work for your insurer, while some carriers hire outside experts. Their job is to determine if the value of your car is more or less than what it will cost to repair.

If it will cost more to fix your car than it is worth, your carrier will usually write off the car and declare it a total loss. This means your insurance carrier will then pay you what it decides that the vehicle was worth at the time of the accident or when it was stolen and damaged. If you disagree with how much your carrier says your car is worth, it is within your legal rights to hire an outside third party to do an independent assessment of the vehicle.

Once your vehicle is written off or "totaled," your car insurance carrier will sell off the parts or the entire damaged vehicle to people who specialize in either stripping or retrofitting such vehicles. That is why it is always important to check a vehicle's title information when buying a used car to ensure you aren't buying a vehicle that was written off as a total loss.

But before all that happens your insurance appraiser will often times use resources like Kelley Blue Book for estimates of your particular vehicle's value and may also do local research to see how much models like yours are selling for in your area. Your insurance company will also look into any known mechanical problems with this vehicle, rate of theft and even the condition of specific parts of your vehicle to come up with a final estimate of your car's worth and value.

Some insurance carriers will rate everything, from the condition of the tires, to the dashboard, to the seats, to the exterior paint of non-damaged body panels. So if you take good care of your car, the higher the likelihood your insurance carrier will decide to have it fixed. You see, it always pays to be a conscientious and careful car owner.