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The most common settlement method used by auto insurers to establish the value of an insured vehicle at the time of loss is to base the value on the vehicle's current Actual Cash Value (ACV). ACV is simply the cost of the vehicle, minus depreciation, also commonly referred to as Fair Market Value. There are several sources available to help you determine the Actual Cash Value of your vehicle. These include the following online vehicle valuation estimate tools at:

How each of our Mexico Auto Insurers determines the value of a vehicle at the time of a covered loss:

Questions Regarding Vehicle Value

What happens if I owe more for my vehicle than the actual cash value?

For financed vehicles, where the remaining balance owed to the lienholder is greater than the current market value of the vehicle, the loan agreement with the financial institution may still require the borrower to insure the vehicle for at least the amount that is owed. Should an insured happen to be "upside-down" on a vehicle loan, and owe more for the vehicle than what it is currently worth, they'll still likely have to pay for a higher limit of insurance to match the amount owed to the financial institution, in order to satisfy the lenders requirements. However, the insurance company will only pay up to the current market value, and not the higher limit that the lender may be forcing the insured to purchase.

What happens if I choose to under-insure my vehicle?

Choosing a limit of coverage that is less than the actual cash value of a vehicle will not only leave an insured with insufficient funds to replace a vehicle in the event of a total loss, but could also potentially affect the amount that would be paid out for repairs, in the event of a partial loss.

For example: Let's say a car has a suggested retail value of $20,000 in the Kelley Blue Book, but an insured decides to insure the vehicle for only $10,000. In this case, in the event of a total loss, the insurer will only pay the amount that was listed on the policy. In the event of a partial loss, the insured will see a 50% deduction in the amount that the insurance company would pay for any loss. So, in this scenario, if the vehicle sustains $5,000.00 worth of damage, then the insured could be looking at a settlement for only $2,500.00, which would only be half of what is needed to repair the vehicle. Taking the time to look up and use an accurate value for a vehicle is not just a good idea, but could end up saving the insured lots of money in the long run.

What happens if I choose to over-insure my vehicle?

Choosing a limit of coverage that is greater than the actual cash value will simply make an insurance policy more expensive than it should be. The insurance companies will still only pay up to the actual cash value, even if the insured chooses and pays for a higher amount.

For example: Let's say a car has a suggested retail value of $20,000 in the Kelley Blue Book, but an insured decides to insure their vehicle for $30,000. In this case, the insured would be paying a much higher premium for an extra $10,000.00 to be added to the limit of insurance, but the insurer would still only pay up to the $20,000 Actual Cash Value that is listed in the Kelley Blue Book in the event of a covered loss.

What happens if I have a vehicle with lots of aftermarket accessories, or costly modifications?

Our Mexico Auto Insurance policies are designed to cover most common vehicle makes and models, with original equipment attached by the manufacturer. The terms and conditions of the policy may stipulate that any accessories must be installed by a shop authorized by the vehicle manufacturer. Aftermarket game consoles, sound reproduction equipment and video equipment are most often excluded from the coverage. Our auto insurance is not ideally suited to offer the additional coverage needed for vehicles that have had extensive aftermarket accessories added, or that have undergone costly vehicle modifications.

In summary, correctly valuing your vehicle is extremely important. The best way to do so is to take the time to get a valuation from Kelley Blue Book. Which option should you use? We suggest you use Suggested Private Party Value. ABA states that's what it will use, GNP uses it in practice, and it will be a decent estimation of what ACE will use.

Written By , Chief Revenue Officer

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