You may ask “how do auto insurance companies determine vehicle value?” They use various different factors when it comes to determining values for the purpose of both rating purposes and for paying out on accident or theft claims.
A major starting point used for determining vehicle value is the Kelly Blue Book; a guide for trade-in, retail and private party vehicle values. Kelly Blue book takes into consideration many factors for determining value including year, make, model, sub model, condition options, mileage and more. Companies usually use the retail value for insurance purposes; however, it is only a starting point which can be adjusted. There has been circumstances where an insured is offered less than what is expected and effectively renegotiates the value.
Kelly Blue Book values are also used by some companies to determine auto insurance quotes. The value of a vehicle is what insurers are on the hook for, so the more expensive the vehicle, generally the higher the premium will be. It is also important to realize that when purchasing full coverage or physical damage protecting one’s vehicle, in the event of a total loss, the insurance company will pay out the assessed value and not what is owed towards the financed loan of the vehicle. This can leave an insured owing interest to the lending entitiy.
There is Gap coverage designed to pay for the difference between the insurance payout and the loan interest. This can normally be requested through the finance company and may be fairly inexpensive (ranging within $20 per month).
Another situation to avoid is purchasing only liability coverage and ending up having a total loss to a vehicle. This can leave the insured car-less and if there is still money owed on a vehicle, in debt. One can end up still paying for the balance of a loan obtained for the vehicle itself.
Purchasing comprehensive and collision coverage for a vehicle with value is recommended. To find out which insurer will charge you less for coverage, complete the following form to compare auto insurance online from a variety of companies and let the lowest price come to you. When a variety of insurers compete for your business, you win!
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