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Two weeks ago we reviewed the difference between replacement cost and actual cash value coverages on a property policy. This week we will review a similar concept and how it relates to auto insurance. This is also a topic we receive a lot of questions primarily when claims are filed.


Many times when a customer is in an accident or has a hail claim they are disappointed by the amount of money they are receiving to fix or replace their car. Many people ask the question: “I paid $25,000 for my vehicle, why am I only getting $10,000 to replace my car?”


This is a fair question. The most important thing to remember about cars is the minute you purchase one, its value starts depreciating. Or more simply put, starts declining in value. A vehicle begins to decline in value almost immediately because as a driver we are already putting miles and wear and tear on our vehicle. The more we drive a vehicle the more the value will decrease. This is common among almost all vehicles unless it’s a high value or collector vehicle.


When it comes time for a claim, there is a lot of misunderstanding and disagreement regarding the value of a vehicle. As an agency we try to remind all customers that the amount you paid for a vehicle is not what you will receive. When an adjuster comes to make an estimate on your car they will use a calculation that takes into account the year, make, model, mileage, and condition of the vehicle. The amount they determine takes into account what the vehicle’s current value is, not what you paid for it.


It’s important to be mindful of the factors that are reviewed in the valuation, however, we always recommend double checking your estimate with Kelley Blue Book or even your trusted body shop to make sure the values are correct.

Posted 12:10 PM

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