What is a "Total Loss?"
In its most simple form, a "total loss" situation occurs when a vehicle is damaged to the point that the insurance company determines that it would save money by offering to pay the full market value of the subject vehicle and keep the wreckage for parts or resale.
To determine total loss, insurance companies typically offer you, on AVERAGE, 20%-35% less than fair value. However, this can vary depending on your specific auto and the specific market in which the auto is located.
The process that insurance companies often follow can be highly inaccurate. This is not usually due to any intentional attempt to mislead the claimant. Most often it is because of the methods and software used by the insurance company.
One of these commonly used software packages is the “CCC” report. The basis of this report is two to four comparable vehicles that the software selects that are supposedly for sale on the open market. Researchers have found that a high percentage of the vehicles cannot actually be verified. The vehicles that can be verified are usually the lowest valued vehicles that are for sale.
Other software systems will use the NADA (National Auto Dealers Association) value as the sole source for their evaluation. The problem with this is that there is often a large variance between the industry recognized evaluation companies such as Kelly Blue Book, NADA, and Edmunds.com.
We can accurately determine the value that a vehicle will hold on the open market through a simple, thorough evaluation of several sources.
The first step is to evaluate the vehicle as a dealership would. By averaging Kelly Blue Book, NADA, and the Manheim Auto Auction values we can get a clear representation of the value a dealer would place on the vehicle. In an effort to be as reasonable as possible with the insurance company, we do not add value to any of the book values for options that are on the subject vehicle.
Next, we do a separate assessment by finding a range of comparable vehicles that are accessible for the client to purchase that closely resemble the subject vehicle. We take the averages of these vehicles and adjust for any mileage differences.
These two separate evaluations will often be very close. As a last step both evaluations are averaged together to come to a fair and neutral value for the vehicle.