How do you determine the value of an asset? There are many ways to do that but the most common when it comes to insurance is to decide how much it would cost to replace the asset, then deduct a calculated amount for depreciation.
This is exactly what your insurance company will do to arrive at the actual cash value for your vehicle when filing for car accident claims Detroit.
In many cases, an actual cash value is a plus for insurance and seldom benefits the insured. The insurance company defines the actual cash value as the total replacement cost less depreciation.
This means that replacing the car is costlier than the actual value of the car at the time, particularly if it’s an older car, affected by depreciation, or with high mileage. The cost of new cars goes up over the years, and cars always depreciate over time.
Fair Market Value
The fair market value is the price at which property would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or sell and both having reasonable knowledge of relevant facts.
Simply put, fair market value is the price an interested buyer is willing to pay to a seller who has the intent of selling his car. This is not the case when an insurance company wants to determine the fair market value of a car. Determining fair market value can be a tricky affair especially when it comes to unusual or unique objects.
Knowing the fair market value for particular vehicles can be a herculean task, especially those that hardly depreciate in value, for example, collector cars or customized cars.
Actual Car Value
After an accident and a proper assessment of the damage, your insurance company steps in. However, most insurance companies will only pay the actual cash value of the affected vehicle. So how does an insurance company arrive at the actual cash value?
This method takes depreciation into cognizance. The value of a car is calculated using the replacement cost less depreciation.
Car owners who bought their car brand new through auto financing will find this method highly unfavorable. Since you still have a lot to settle on the car loan, you may be left stranded financially if the insurance company decides to compensate you using the actual cash value method. This means you will have to try out other means to make up the loan difference.
Depending on the car’s make and model, you can dispute the offer and negotiate a better deal. It is often best to hire a professional lawyer who is well versed in car accident claims in Detroit. They can help you file a claim and get the compensation your rightly deserve.
Filing a claim can be stressful, hence you need assistance. Fortunately, you can get these professional lawyers easily. They are closer than you think.
The internet is home to a wide range of experts who specialize in car accident claims in Detroit so be sure to do your research diligently. Go with the one you are comfortable with.
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