Which Car Value for Insurance Claims is Best?

Author: Ranny Watson

As a car owner or a prospective car owner, there are some information you should have already. One of such is to know how best you can benefit from insurance companies. For non-insurance experts, the jargon that insurers use when discussing business might be hard to understand. To get the best deal from them, you must be able to at least understand if not speak their language. Explained below are some of the terms regarding car value for insurance claims Connecticut.

The Different Types of Car Value

Insurance companies have different methods of valuing a vehicle. The valuation method depends on the type of insurance policy that the client chooses.

  • Actual Cash Value (ACV) Or Fair Market Value (FMV)

These terms denote the actual worth of a car at any given time after accounting for its depreciation. It is the price that an interested buyer will be willing to pay for your vehicle given its conditions at any given time. In the event of a total loss, this valuation method provides policyholders with an amount that is equal to the worth of his car right before the loss.

These valuation methods do not provide clients with enough to replace their car in the event of a total loss as new cars are known to depreciate rapidly once driven off the lot.

  • Replacement Cash Value (RCV)

This is the cost it would take to replace a car at any given time according to its current worth. Thus, in the event of a total loss, a client that used this method to determine his car value for insurance claims Connecticut would be paid enough money to buy the same type of car he lost on the current market.

  • Agreed Value

This sort of valuation method can be likened to an agreement reached between the insured and the insurer on what the car is worth. Thus, in the event of a total loss, the insurer must pay the insured the total agreed amount. This is a special type of valuation method that is used by clients who wish to insure their car for an amount that is either above or below the current market value. It is mostly used by people who want to insure a classic or a custom car.

It is important to note that this valuation method isn’t open to every car owner. Your car must meet a certain requirement before this policy is given out.

  • Diminished Value

This value comes into play in the event of an accident where there was no total loss. An accident automatically decreases the value of your car on the market. This decrease in value is maintained even if the car’s restored to perfect conditions after repairs. If the accident is a result of the negligent act of another road user, you can file for diminished value claims with the insurance company of the at-fault party.

  • Salvage Value

Sometimes you might decide to still keep your car even after it has been declared a total loss. At this point, the insurance agency must determine the salvage value of the car and subtract it from the total money that would be paid out to you in compensation for your loss.

The salvage value is the price that an insurance agency would have sold the car for. In most cases, they sell to junkyards.