How do insurance adjusters determine the value of a vehicle?

Insurance companies will usually assess your vehicle using the actual cash value of your car in the market. We'll cover more details including how your car value is determined.

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Rachel Bodine graduated from college with a BA in English. She has since worked as a Feature Writer in the insurance industry and gained a deep knowledge of state and countrywide insurance laws and rates. Her research and writing focus on helping readers understand their insurance coverage and how to find savings. Her expert advice on insurance has been featured on sites like PhotoEnforced, All...

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Written by Rachel Bodine
Feature Writer Rachel Bodine

Dan Walker graduated with a BS in Administrative Management in 2005 and has been working in his family’s insurance agency, FCI Agency, for 15 years (BBB A+). He is licensed as an agent to write property and casualty insurance, including home, auto, umbrella, and dwelling fire insurance. He’s also been featured on sites like Reviews.com and Safeco. He reviews content, ensuring that ex...

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Reviewed by Daniel Walker
Licensed Auto Insurance Agent Daniel Walker

UPDATED: Jun 13, 2022

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Things to Remember...

  • In case of an accident, the insurance company will pay up to the actual cash value (ACV) of the car either to repair it or replace it
  • The ACV is the fair market value of your car at the current rate and the pre-accident condition of the car
  • The claim amount proposed by the insurer is negotiable

Your car accident was bad enough, but the aftermath can be even more stressful. Once you file your car insurance claim, you might find out your car is totaled. The insurance company might surprise you by valuing your car at a rate less than what you expected. 

After your car is valued for less than you expected, you might wonder, “How do insurance companies determine the value of a car?” 

The insurance valuation process might seem random and make you feel lowballed as the proposed number might differ vastly from what you were expecting. Insurance adjusters don’t assign random values. There are standard methods they have to follow to set a price for your vehicle, and you can also negotiate to get a better value.

How do insurance companies determine a car’s value? 

While most valuation complaints happen after a total loss settlement, a valuation happens anytime you make a claim. Your car will be valued even if you claim minor fender bender damages. All of your claims will result in the adjuster valuing your vehicle no matter how significant the incident was. The adjuster will then opt to repair or replace your car based on its value versus the amount repairs might cost. 

This is the process insurance adjusters follow to value your damaged car:

Inspecting the Damaged Vehicle

This is the first step in the valuation process. Once you file your claim and disclose the damage to your car, the insurance company will send an adjuster to you or the repair shop to conduct a thorough inspection of the car. 

The inspection is to estimate the extent of the damage. Based on this, the insurer will decide whether it is worth paying for repairs or not. 

If the repairs are more than 70% of the actual cash value of the car, the car will likely be declared a total loss. 

Assessing the Car’s Condition

This step is important as it’s how the insurance company decides the value of your car. If you have filed a claim, the adjuster will access your car to determine the actual cash value (ACV) of the car. An adjuster can’t just look at the car and decide the car’s value. Insurance adjusters have guidelines and resources at their disposal to determine the car’s value. 

These are the common factors that insurance companies use to determine the value of the car:

  • Make, model, and year 
  • Depreciation
  • Pre-loss condition of the car
  • Mileage at the time of the accident
  • Salvage value
  • The sales value of similar cars in the region

The insurance adjuster will derive a fair value for your car by evaluating your car on the above-listed points. 

Estimating the Cost of Repairs

The adjuster will then compare the fair market value with the estimated cost of repairs and replacement parts to determine the amount the insurance company should pay. if the repair costs are 70% of the ACV of the car, the car will almost always be totaled. 

The average insurance valuation of the totaled car will depend on the ACV of the car.  Once the insurance company has estimated the amount, you will either receive the cost of repairs or the ACV of the car. 

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You Can Negotiate the Claim and the ACV of the Car 

How can you get more claim money from your car insurance? The answer is by negotiating. You buy insurance so that in case of an accident, your insurance company will pay for the damages, but sometimes you have to push to get an acceptable amount of money back.

You can even ask your insurance company to total your car if you think they’ve underestimated the cost of repairs, the impact on your vehicle’s future value, or if you think you would be better off replacing a crashed vehicle than repairing it. However, it is always up to the adjuster to make the final call.

You can drive up the value of the car by making these points:

  • List the additional features of your car
  • Give the estimated retail value of your car
  • Present comparable sales data of similar cars in your region

These points will give you wiggle room and will help drive up the value of your car. 

The Replacement Value of Your Vehicle Isn’t Random

The insurance valuation of your car isn’t based on a whim. Insurance adjusters have valuation guidelines and resources they can use to estimate the value of your car. 

While there is a valuation method, insurers prefer the lowest value of the car as opposed to the policyholders, who would prefer to get the highest possible value for their vehicle. This is why the claim amount you receive is sometimes less than your expectations.  

You can negotiate the initial claim amount proposed by the insurance company to get a higher claim payout from your insurer. 

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