Total Loss Car Accident?
If you totaled your car then here are some helpful tips to negotiate the Actual Cash Value of your vehicle.
Actual Cash Value vs Replacement Cost
The actual cash value is usually not going to be what it costs to replace a car. So maybe you had a major accident and the car is totaled,
the price tag to buy a new car will always be more than what your totaled car was worth at the time of the accident.
Instead of choosing the actual cash value option on a policy if the policy has that endorsement, choose coverage that provides for replacement value.
This is why it is important for you to read your paperwork and do your homework when purchasing a policy. When the policy comes in there are explanations of extras you can buy
like Replacement Cost but there is a price and many people are not willing to pay it.
For future reference replacement cost in many cases, not only is payment provided to purchase a new car, but additional expenses like sales tax,
title and transfer fees may also be included, although you may have to ask for these expenses to be included or covered.
Replacement value car insurance is certainly much more expensive than accepting actual cash value coverage.
However, for many people, the added premium is well worth it when they consider the expense of replacing their vehicle.
the Actual Cash Value Determined?One of the ways the value of an asset is determined is to calculate or decide what the replacement cost of a car would be, then deduct an appropriate amount for the age and wear of the car.
By definition in court cases, the replacement cost is described as "the entire cost of complete repair or replacement of an asset--taking no deductions for depreciation."
This indicates clearly that the replacement cost is higher than Actual Cash Value. So the replacement cost is calculated, then deductions are made to arrive at the actual cash value of an asset such as a car.
Sometimes this definition favors the insured, and sometimes the insurer. For example, imagine a car with an estimated value of $14,000 is destroyed in a tornado.
The insurer has defined the actual cash value as the cost of replacing the car minus deductions for age.
Replacing the car often costs more than the car it is worth at the time, particularly if it had high mileage or a great deal of wear.
The cost of new cars goes up over the years, and cars always depreciate over time.
If the replacement cost is higher than the car is worth on the market--say it costs $23,000 to replace with a brand new car, then the insurer
ends up with a higher settlement using the replacement cost method to determine actual cash value.
Tips To Negotiate the Actual Cash Value of Your CarThese are some tips for helping Policy Owners to figure out how to use knowledge of the system for a reasonable offer from an insurer.
The below was offered at carsdirect.com