Underneath the still water of car insurance lies an unseen monster that comes up and attacks every car owner who has their car replaced after an insurance company declares the vehicle a total loss. Consider this true story:
Becoming a victim…twice
Your daughter is rear ended by a distracted driver while waiting to turn left. The insurance company of the person who hit her considers the car a total loss. To her surprise, the amount the insurance company offers for her vehicle is approximately 20% lower than the cost to replace her vehicle! Is this a mistake? As it turns out…no… it is a systemic occurrence of paying less than the Fair Market Value* by virtually all insurance companies.
So now your daughter is a victim of two tragedies. One, as an innocent victim of a car accident that totals her car and two, as a victim of the insurance company.
The fair market value fallacy
Unbeknownst to most of America, the valuation of vehicles deemed a total loss is determined by one company, CCC Intelligent Solutions. Per CCC, their services are used by18 of the top 20 insurance companies and their valuation model does NOT use a Fair Market Value standard to replace your vehicle. Instead, their model determines a value that, when compared to valuation models found at Kelly Bluebook, Edmunds, and NADA is systemically low.
Variables become an opportunity to cost you money
Think about it...why does CCC Intelligent Solutions have a stranglehold on the car valuation business? Because it saves the insurance companies money. Here are three things they do to ensure insurance has the edge in payouts:
The reason all this works is because valuation is never one number but rather a range of values and the CCC model figures out how to stay low, but not so low that it cannot be defended in court.
What you can do
While hard to do, always drive towards fair market value and not some unbalanced valuation model driven by a single company as the only factor when valuing your totaled vehicle.
*Fair Market Value standard as defined by the Internal Revenue Service in determining the value of all tangible assets, including automobiles.
Out of an abundance of caution we have closed our office to any in-person meetings. We continue to work and ask our clients to upload their documents to us and chat over the phone as needed. We are also accepting documents by drop off or snail mail. Of course, you can always call us 425-640-8660LEARN MORE