What do car insurance companies use to determine car value?
I just bought a 2008 used car. I bought GAP insurance (pays the difference between what the car is worth and the amount of the loan if the car is totaled) for $600. I have 30 days to cancel the insurance for a full refund (to my finance company). Do insurance companies use Kelly Blue Book retail value, private sale or trade-in value to determine the value they will pay for a totaled car? If they use retail or private sale, I can cancel and be okay if I get totaled, but if it is trade in, I will be $3000 in the hole with no car.
I already have comprehensive and collision coverage and am just wondering if the GAP was worth keeping. Since I can apparently get a prorated refund if I pay the car off early (which I plan to do), I will go ahead and keep the GAP for now.
As a claim adjuster my advice is to keep the GAP coverage. I see too many claims where people don’t have GAP coverage and they take a financial bath on a total loss car. I have seen people have to transfer the loan balance owed on a total loss car to the loan for their replacement car. That puts them in even worse shape.
Most companies don’t go strictly off of book prices as the local market values can change in a hurry (like for owners of Toyota cars on the recall list). Most companies will try to locate similar cars sold through services like CCC or by looking at ads on line to get a value for your area.
Based on the misery I have seen these folks go through I would strongly suggest you keep the GAP coverage.
July 17th, 2010 at 10:01 pm
your shopping for insurance and pretty much any of them under ful coverage does that
your planning on crashing no way to think
References :
July 17th, 2010 at 10:09 pm
When determining the value of a total loss, insurance companies use fair market value, and adjust that depending on condition. Fair market value is the total of similar vehicles with similar mileage in your area, what they are selling for added up and divided by the number they find to get an average.
The idea behind gap coverage is to protect you in the event of being both upside down, and having a total loss. You can generally only get it at the beginning of the loan of course, for obvious reasons.
No one plans to have an accident, let alone a total loss accident, so the question becomes this: Is the peace of mind worth $600 to you.
References :
July 17th, 2010 at 10:56 pm
As a claim adjuster my advice is to keep the GAP coverage. I see too many claims where people don’t have GAP coverage and they take a financial bath on a total loss car. I have seen people have to transfer the loan balance owed on a total loss car to the loan for their replacement car. That puts them in even worse shape.
Most companies don’t go strictly off of book prices as the local market values can change in a hurry (like for owners of Toyota cars on the recall list). Most companies will try to locate similar cars sold through services like CCC or by looking at ads on line to get a value for your area.
Based on the misery I have seen these folks go through I would strongly suggest you keep the GAP coverage.
References :
Claim adjuster 23 yrs