Small Business Brief

Auto Dealership, Insurance

How to Calculate a Car Damage Estimate

It’s estimated that there are around six million car accidents every year in the United States. Unfortunately, many of these cars end up totaled. When that happens, an insurance representative will pay the driver what they deem to be the value of the car. 

This value is known as the ACV, or actual cash value. But how exactly do they calculate that value? Continue reading and we’ll walk you through how the professionals calculate a car damage estimate. 

What Is ACV?

The ACV is how much money your insurance company will pay you after your car has been totaled in an accident or stolen. The ACV is what your car was worth right before the collision occurred minus whatever the deductible that you’re required to pay is. 

Your insurer is going to consider factors such as general wear and tear to your car, past accidents, and account usage. This can mean that the calculated ACV of your car will be hundreds or even thousands of dollars less than what you paid for it. 

Even if you’re an extremely careful driver who keeps their car in pristine condition, your car loses value the second you drive it off the lot. This depreciation of value is also taken into consideration.

And if you just bought your car and barely got the chance to drive it, the ACV is most likely going to be a lot less than what you paid because the car is no longer brand new. Because of this, some owners decide to purchase additional insurance coverage in case their car happens to get totaled. 

How Is ACV Calculated?

The majority of car insurance companies utilize industry algorithms in order to calculate the ACV of a vehicle. Because of this, it can be difficult to accurately predict what value your insurance representative will present to you after your car is totaled.

As we stated earlier, your insurance company is going to factor in your vehicle’s mileage, age, and any previous claims you made. They’ll also consider the effect of months or even years of standard wear and tear on your car. 

More than likely, your insurer will look at similar vehicles that are for sale in your area. They’ll also look at cars that share the same make, model, and other features to your vehicle so they can get a better picture of how much your vehicle would’ve been worth right before it was in an accident. Your insurance representative might even show you the comps when they’re paying out the claim. 

It’s possible that your insurance company will come up with a value that is exactly what your vehicle was worth before it was totaled. Or, they might even pay you more money than what the car’s actually worth. This can be especially true if your car was banged up and damaged before it was totaled but your insurance company didn’t know that information. 

Unfortunately, there’s also a very good chance that you will end up receiving a check from your insurer that is lower than what you believe the car is actually worth. If this is the case, you do have the ability to dispute the appraiser’s valuation.

Also, using a PDR app is a great way to calculate the cost of a vehicle’s repair. 

How to Dispute the Insurance Company’s Valuation

If you believe that your insurance company came up with an ACV for your car that seems too low, you will have the option to dispute the offer. In order to do this, you will have to be able to show that the fair market value of your car was higher than what the insurance company is offering to pay you.

You can start by searching for vehicles that are for sale in your area that are as similar as possible to your car. Try to get as specific as possible. Don’t just search for the same model and make but also look for similar accident history, wear and tear, mileage, and other features. 

In order to give more credibility to your research, don’t just search for cars on online marketplaces like Facebook or Craigslist. Also, go over to car dealerships and see if they have comparable cars for sale.

You should also definitely look up the value of your car on Kelley Blue Book’s website. Kelley Blue Book is an extremely resourceful car valuable company.

Make a list of examples that shows that your car is worth more than what your insurance company was offering to pay you. Present these findings to your insurance company.

Being prepared for a situation like this could help your appeal exponentially. If you’ve had your car for several years, it could be a good idea to take the vehicle to a dealership and have them professionally appraise it. 

First off, it’s always handy to know the current value of your car. Also, in the unlikely chance that the car should be totaled, you’ll have a concrete record of how much it was worth on a specific date. 


The Importance of Knowing How to Calculate a Car Damage Estimate

If you don’t understand or know how to calculate a car damage estimate, then you’ll be at the mercy of the insurance company when you come up with your ACV. By being informed and knowing how the process works, you can make sure that you’re being treated fairly and that the insurer is giving you an accurate valuation.

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