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How Insurance Companies Appraise Your Car

Let’s take a moment to examine the nitty-gritty details of your post-accident car appraisal. As explained elsewhere on this website, insurance companies paying under a liability policy have no obligations to a claimant. The claimant does not have a contract with the liability company and therefore no contractual obligation exists, no duty attaches. However, state legislatures have created obligations and duties by statute for insurance companies. These duties and obligations were enacted in order to compel insurance companies to settle property damage claims quickly and fairly.

Many years ago insurance companies held all the cards when it came to property damage. They could offer lowball offers for thousands of dollars less than the automobile was worth because people didn’t have enough money lying around to buy a new automobile without settling on their wrecked car. But people needed cars to get to work and everything else, so consumers were often forced to settle for much less than his car was worth. On many occasions I heard from a claims supervisor, “Keep that offer right where it is. They’ll get tired of walking.”

Legislatures began to allow insurance claimants to separate their claim and also began to compel insurance companies to conform to certain guidelines when it came to property damage claims, even liability property damage claims. Simply put, an insurance company that does not comply with the statutory requirements for a repair or a total loss settlement will be in breach of an implied covenant of fair dealing and will be subject to a lawsuit. Insurance companies don’t like lawsuits very much– so by and large you can expect your property damage claim to be handled promptly and pretty fairly. Insurance companies like to take credit for this prompt and fair settlement of property damage claims. Seems a little disingenuous to me, but hey, that’s business… right?

Liability and property damage policies ensure that a wrecked car must be either repaired or replaced. If the total cost of repairs and associated expenses exceeds the insurance company’s estimate of the car’s market value, they will declare that car a total loss. But how do they calculate a car’s value in the first place?

Private property value describes the hypothetical amount for which you could have sold your car to another private citizen on the day the accident occurred. Retail value is the amount the vehicle could sell for if it were placed on a used car lot, and will thus be higher than its private property value. Trade-in value is the amount a car dealership would offer you for your car if you simultaneously bought a new car from them. Trade-in value will be lower than both private property value and retail value.

Insurance companies often used to play with these numbers, but the legislature has ended these games. Now, insurance companies are required to conduct an independent, government-certified appraisal (all insurance companies in Alaska that I know of use a company called CCC) of your car’s private property value, and then make you an offer equal to every dime of that appraisal. As a result, total loss settlements are usually pretty fair.

Bodily injury claims, though? That’s another story. And that’s why law firms like Crowson Law Group exist.

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