When an automobile is written off after a collision, the vehicle owner can expect to receive fair market value for that vehicle as part of their insurance claim.
Most motorists who find themselves in this situation accept the insurance company’s appraised value, receive their payment in due course, and that’s the end of it.
But there are cases where motorists don’t agree with the appraised value, where their ‘written off’ vehicle was well below what they thought it should be.
Sometimes, that appraised value can be thousands of dollars below what the vehicle owner thinks it should be.
Fortunately, if you find yourself in this situation, there are steps you can take to try and arrive at an equitable settlement with the insurance provider.
An insurance appraiser determines how much a vehicle is worth based on the odometer reading, condition of the vehicle, similar models for sale, and upgrades.
Some insurance companies hire a third party company that shops dealers to get pricing and availability of a replacement vehicle. Some don’t, and thus there can be a major discrepancy in the amount you are offered versus what the vehicle is truly worth.
To challenge the appraised value of your vehicle, ask your insurance provider to justify their appraisal. What dealers did they speak to? What classified websites did they utilize? Request to see their documentation.
After that, you’ll need to do some homework. You can either hire an independent appraiser to conduct the research on your behalf (approximately $400-500), or you can conduct the research yourself.
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That research will entail contacting new car dealerships and asking for a valuation based on the pre-accident condition of the vehicle; viewing classified websites; gathering information on similar models, with similar mileage and in similar condition.
If you recently invested a large sum on repairs or upgrades to your vehicle, factor those costs into your valuation as well and be prepared to provide proof to the insurance company.
Once you have conducted your own appraisal, contact your insurance company and try to arrive at a settlement that is closer to what you have in mind.
If you have hired an independent appraiser, they will meet with the insurance provider and represent your interests.
There are times when a consumer and an insurance provider remain at odds over an appraised value. If that happens, a case can be heard by a neutral third party, an umpire, whose decision is binding.
There are also situations where vehicles are not written off after a collision but are deemed worthy of repair, in which case an insurance provider will arrange to have a vehicle repaired to its pre-accident condition.
Consumers are often surprised to learn that they may have to pay for part of those repairs. In industry jargon, collision repair costs borne by the motorist are called ‘betterment charges.’
Betterment charges is a term used by the insurance provider to justify unwillingness to pay the full price for ‘wear and tear’ items. For instance, if at the time of the collision the tires were extremely worn and are part of the claim, the insurance company may cover only a part of the cost of replacement tires, as your vehicle would be in ‘better condition’ with brand new tires after the repairs.
My recommendation would be to keep receipts of any vehicle upgrades; take pictures of your vehicle, and obtain an appraisal before you need it after a collision.
It’s also a good idea to read and understand your insurance policy and to contact your insurance provider if you have any questions. Policies vary from company to company.
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