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Insurers use a variety of resources to assess the fair market value (FMV) of your car. For example, many contracts with third-party, independent vendors such as CCC Information Services Group and ADP/Auto Source to determine the FMV at any given point in time, taking into account factors such as the vehicle’s age, mileage, and driver history.
While these independent vendors are indeed third-party enterprises and not under the direct employ of the insured, it is important to keep in mind they are paid by the insurer in exchange for their services – in other words, they work for the insurer, not the insured. That said, here are some details on how the process works.
Fair Market Value Assessed
Most of the car’s value is assessed from the aspects that never change – its make and model, alignment type, transmission, etc. These assessed values mostly conform to what you might expect if you saw it for sale at an auto dealership, leaving an independent appraiser little room to deviate from when determining the FMV of the specific car in question. In fact, they comprise their database of car values by periodically visiting used car dealerships and recording the minimum dollar amount that the dealer would be willing to sell the car for (also known as the “take” price, as opposed to the “sticker” price).
While this method is generally able to reliably produce a reliable FMV for most vehicles, it can sometimes prove unreliable as most used cars are sold for somewhere between the sticker and take prices, rather than precisely the take price. However, the database is also further supplemented by information generated from published advertisements in newspapers, magazines, television commercials, and auto trading websites.
External Factors Outside Of An Appraiser’s Control
Most of these aspects depend on external factors outside of an appraiser’s control, but they do have an ability to significantly affect a specific car’s final reported value when applying a grade for its present condition. A variety of factors are taken into account when a condition grade is made, including:
- Glass (windshield, windows, etc.)
- Exterior condition
- Interior condition
- Mechanical condition
Each of these factors is assessed one of four condition grades: Below Average, Average, Above Average, and Exceptional.