How do insurance adjusters determine the value of a vehicle?

Auto insurance adjusters determine the value of a car by (1) inspecting the damage, (2) estimating the cost of repairs, and (3) deciding if the vehicle is a total loss.

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Leslie Kasperowicz holds a BA in Social Sciences from the University of Winnipeg. She spent several years as a Farmers Insurance CSR, gaining a solid understanding of insurance products including home, life, auto, and commercial and working directly with insurance customers to understand their needs. She has since used that knowledge in her more than ten years as a writer, largely in the insuranc...

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Dan Walker graduated with a BS in Administrative Management in 2005 and has been working in his family’s insurance agency, FCI Agency, for 15 years (BBB A+). He is licensed as an agent to write property and casualty insurance, including home, auto, umbrella, and dwelling fire insurance. He’s also been featured on sites like and Safeco. He reviews content, ensuring that ex...

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Reviewed by Daniel Walker
Licensed Auto Insurance Agent Daniel Walker

UPDATED: Nov 4, 2021

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Things to Remember...

  • Insurance companies will pay up to the Actual Cash Value of you car to either repair it or replace it when you carry physical damage coverage
  • Actual Cash Value is the fair market value of the car at its current age in its current condition
  • The only time companies won’t factor depreciation into a valuation is when the vehicle is a classic or when the policy has a special replacement cost endorsement
  • To calculate a vehicle’s fair marketing value, adjusters will use several different pieces of data from dealerships and valuation guides
  • The ACV can be negotiable if you have documentation that drives the value up

When you’re involved in a car accident and you file a claim for your damages, it’s the insurance company’s job to investigate the claim.

Only after the claim’s been investigated will the claims adjuster work on deciding how much they should reasonably pay to either repair the covered auto or to pay for a similar replacement.

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Many times, claimants are shocked to see the settlement offer they’re sent when a vehicle is totaled out.

This is because the claimants don’t fully understand how adjusters determine the value of cars when they’re damaged. Valuation methods no longer have to be a mystery.

Read on to find out everything you need to know to plan for future claims.

Inspecting the Damaged Vehicle

The first step in the valuation process is the inspection. Shortly after you’ve filed your claim and disclosed details on the damage that was sustained, the company will send an adjuster to you or to the repair shop to complete a thorough inspection.

The purpose of the inspection is so that the adjuster can decide if it’s worth it for the insurer to proceed with paying for repairs.

In many cases, if at least 70 percent of the car is damaged, the adjuster will decide to total it because it’s more practical for all parties involved.

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Assessing the Condition of the Vehicle

If you’re filing a fire claim or you’ve suffered a major accident where the car was completely mangled, it’s difficult for adjusters to accurately picture the car’s condition rating before the loss occurred.

If, however, you’ve had a minor accident that’s only really affected one area of the car, assessing condition for the purpose of valuation is possible.

As the assessment is being performed, the adjuster will look at trim, tires, engine, interior carpets, seats and other mechanical components that weren’t specifically damaged in the accident.

If your car is in bad shape and it’s difficult to tell how it looked before the unfortunate event, some adjusters will ask you about the condition or ask for photos that you might have lying around that will backup your claims.

If you don’t have pictures, they might also review car history reports which can demonstrate whether or not a car was well maintained.

When is a vehicle declared a total loss?

If you’ve received a settlement offer saying that your car’s been written off or totaled, it’s important to understand what this means and what you can do. A total loss doesn’t always look like it’s not salvageable.

This could be because of the Actual Cash Value of the car or because of the nature of the damages. Here are a few of the most common reasons an adjuster will offer a total loss settlement:

  • The estimated cost of repairs is higher than the fair market value of the vehicle
  • There is a Total Loss Threshold in the state and damages exceed the TLT percentage
  • There is water damage that leads to rust
  • A structural element of the car that compromises its integrity is damaged
  • More than 70 percent of the entire vehicle is damaged and repairs aren’t feasible

Estimating the Cost of Repairs

If it’s not obvious that a car’s been totaled during the initial inspection, the adjuster will then compare the fair market valuation with the estimated cost of parts and labor to figure out just how much to pay.

You will either receive a claims settlement payment to pay for all of the reasonable repair costs or to pay for the car’s Actual Cash Value.

You are paid out for the ACV only when the car’s totaled. This is why it’s important that you review the estimates closely and the valuations closely before accepting any type of claims settlement.

If the estimates are a little too high or the adjuster valued the car too low, it could lead to a salvage title that could’ve been avoided if you would’ve known to speak up.

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What types of data are used to help calculate values?

Insurance adjusters can’t just look at a car and confidently say it’s worth a specific dollar amount. Instead, they’ll use Kelley Blue Book values and sales data to see how much similar cars are going for in the area.

If you have a unique car, the adjuster might look outside of your region to find out how much it’s going for in other markets.

After combining condition, car history reports, and the market information, the adjuster should have a fair offer to send you.

How to Negotiate the Fair Market Value of Your Car

Your goal is to get the most money for your car. Unfortunately, even though it’s a secret in the claims world, it’s the adjuster’s job to give you the lowest possible offer.

You need to do your own homework and push back so that you can exit the process feeling like you got taken care of. Here are some ideas to help you negotiate valuations to avoid write-offs:

  • Ask the adjuster to use a smaller pool of cars to average out values
  • Run your own Kelley Blue Book value with the features in your car
  • Give installation receipts and other invoices for credits
  • Ask for a third-party appraisal to come in and estimate damages
  • Run dealership sales reports to see how much cars like yours have sold for
  • Push back and tell the adjuster how much more you want to settle
  • Provide appraisals for classic cars that are valued on replacement cost

If you’ve filed a claim in the past and you don’t feel like you were given a fair value, it’s time to find a company that you can trust to treat you fairly.

Use an online tool for rate comparisons and you can get a handful of quotes in just minutes. After you’ve seen the rates, you can switch based on claims satisfaction ratings.

Start comparing auto insurance rates now by entering your zip code in our FREE quote tool below!

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