My car was totaled in an accident and it was the other driver's fault. The ins adjuster said CA law says they don't have to pay me blue book value for the car. Is this true??
Total Comments: 8
Posted: Fri Sep 30, 2011 11:11 am Post Subject:
No it's not true, but it's not entirely wrong either. You are entitled to ACTUAL CASH VALUE which is REPLACEMENT COST minus DEPRECIATION.
Published values such as KBB, NADA, and others, are merely estimates of a vehicle's value. They don't always perfectly match what the adjuster thinks the vehicle is worth.
What CA law says is that you are entitled to ACTUAL CASH VALUE (as defined above). The insurance company has a responsibility under the Insurance Code to compensate you fairly for your loss, to not force you to sue them to recover the same amount you should have been entitled to had they settled your claim fairly.
You don't have to accept their first offer. But you shouldn't have to sue them to get what you're entitled to. It's the insurance company's responsibility to locate accurate "comparables" to validate their assessment of your vehicle's value. Make them show those comps to you. If you believe the vehicle was worth more, then you may need to find your own comps to support your claim.[/u]
Posted: Fri Sep 30, 2011 01:02 pm Post Subject:
Replacement Cost Value is what a new item would cost. Actual Cash value is that new items cost, less depreciation.
While there is no "law" about "Blue Book" value, the insurance company is correct. "Blue Book" is owned by Kelly (Kelly Blue Book) and KBB is really nothing more then a scam. Read what their values mean... they are _asking prices_... not selling prices. Online they now allow a person to look at prices two ways... I'm buying a vehicle and I'm selling a vehicle. If you put the same vehicle in, you get two different prices. Why? Again, because those are simply the prices that a person should start asking when buying or selling a vehicle. When you walk into a dealer and see the sticker price... that's the KBB amount. Who pays sticker price? No one. It's a made up number that allows a negotiation to start.
Posted: Sat Oct 01, 2011 04:28 am Post Subject:
I live in California and my car was totaled a couple of years ago. The procedure the insurance company must use is spelled out in the California Code of Regulations, Title 10, Chapter 5, Subchapter 7.5 (Fair Claims Settlement Practices Regulations), also known as CCR Section 2695.
Barclay's publishes this document (google "Barclays Fair Claims Settlement Practices Regulations"). I advise you get a copy and look at Section 2695.8(b)(4) in particular. It basically states that the insurer must use either:
(A) the average cost of two or more comparable vehicles if they are available, or
(B) two or more dealer quotes if no comparable vehicles are available, or
(C) a computerized valuation service that produces "statistically valid" fair market values, or
(D) other stuff should (A), (B), and (C) not be available (which is rare).
If you'll notice, traditional "blue book" values are not really a part of the process.
So, what is the blue book value and what are they offering? If you don't like what you are offered, ask for a copy of the valuation report IN WRITING (actually, you should really request a copy either way). Make sure it is accurate, and in particular, look for the condition they list your vehicle as (good, average, below average, etc.).
Good luck to you, and if you have any further questions, just ask!
Posted: Sat Oct 01, 2011 05:25 am Post Subject:
Kelly Blue Book is the MRP for vehicles. All car depreciate the moment they roll out of the showroom. True, no one pays KBB prices, because they can't. Car's depreciate very fast and can cost a lot less than their showroom values in just 6 months time. But you have the right to get the value of your vehicle according to the fair market values. So, you can compare prices before accepting what the insurer pays you.
Posted: Sat Oct 01, 2011 07:49 pm Post Subject:
(C) a computerized valuation service that produces "statistically valid" fair market values
Arguably, I think KBB could fit within this definition of "statistically valid", considering that many dealers and lenders continue to use it as a "measure" of a vehicle's value. That's what makes it valid. Is it computerized? Presumably. They aren't necessarily pulling values out of thin air. As long as the "statistical" sample is large enough to be representative, the validity would not be challenged.
It's the "accuracy" of their statistics that are called into question as far as insurance companies may be concerned. Notice that the CCR Section 2695.8(b)(4)(C) does not state "statistically accurate". Valid is one thing, accurate is another.
Nevertheless, you are correct in describing the process that insurers are obligated to use under the Fair Claims Settlement Practices Act. The Barclays book is an excellent reference, as are a few others. Great post!!
Posted: Sat Oct 01, 2011 08:46 pm Post Subject:
Problem is... even KBB does not represent their prices as "fair market value". They specifically state that they are asking prices and no more then a starting point for negotiation.
Posted: Sat Oct 01, 2011 09:05 pm Post Subject:
Thanks for the reply, Max.
It's the "accuracy" of their statistics that are called into question as far as insurance companies may be concerned.
I agree, but I would also think that brings into question the "statistical validity" of the numbers. I think we've all seen more or less the same used car ad: I'm asking $1,500 (or whatever) less than Kelly Blue Book! There's no way every car can sell below KBB without KBB being too high.
On the other end of the spectrum, the "computerized valuation service" used by the insurance company handling my case had spent millions of dollars settling class action lawsuits alleging they were under valuing people's cars. A few hundred dollars here and a few hundred dollars there can really add up! :)
Posted: Sun Oct 02, 2011 01:40 am Post Subject:
I agree on both accounts....
KBB exists so that dealers (who pay KBB) can make it look like they are discounting their vehicles below what they are worth.
Companies such as CCC are getting _way_ to aggressive in low balling their valuations. I see them double dip a lot.
Posted: Fri Sep 30, 2011 11:11 am Post Subject:
No it's not true, but it's not entirely wrong either. You are entitled to ACTUAL CASH VALUE which is REPLACEMENT COST minus DEPRECIATION.
Published values such as KBB, NADA, and others, are merely estimates of a vehicle's value. They don't always perfectly match what the adjuster thinks the vehicle is worth.
What CA law says is that you are entitled to ACTUAL CASH VALUE (as defined above). The insurance company has a responsibility under the Insurance Code to compensate you fairly for your loss, to not force you to sue them to recover the same amount you should have been entitled to had they settled your claim fairly.
You don't have to accept their first offer. But you shouldn't have to sue them to get what you're entitled to. It's the insurance company's responsibility to locate accurate "comparables" to validate their assessment of your vehicle's value. Make them show those comps to you. If you believe the vehicle was worth more, then you may need to find your own comps to support your claim.[/u]
Posted: Fri Sep 30, 2011 01:02 pm Post Subject:
Replacement Cost Value is what a new item would cost. Actual Cash value is that new items cost, less depreciation.
While there is no "law" about "Blue Book" value, the insurance company is correct. "Blue Book" is owned by Kelly (Kelly Blue Book) and KBB is really nothing more then a scam. Read what their values mean... they are _asking prices_... not selling prices. Online they now allow a person to look at prices two ways... I'm buying a vehicle and I'm selling a vehicle. If you put the same vehicle in, you get two different prices. Why? Again, because those are simply the prices that a person should start asking when buying or selling a vehicle. When you walk into a dealer and see the sticker price... that's the KBB amount. Who pays sticker price? No one. It's a made up number that allows a negotiation to start.
Posted: Sat Oct 01, 2011 04:28 am Post Subject:
I live in California and my car was totaled a couple of years ago. The procedure the insurance company must use is spelled out in the California Code of Regulations, Title 10, Chapter 5, Subchapter 7.5 (Fair Claims Settlement Practices Regulations), also known as CCR Section 2695.
Barclay's publishes this document (google "Barclays Fair Claims Settlement Practices Regulations"). I advise you get a copy and look at Section 2695.8(b)(4) in particular. It basically states that the insurer must use either:
(A) the average cost of two or more comparable vehicles if they are available, or
(B) two or more dealer quotes if no comparable vehicles are available, or
(C) a computerized valuation service that produces "statistically valid" fair market values, or
(D) other stuff should (A), (B), and (C) not be available (which is rare).
If you'll notice, traditional "blue book" values are not really a part of the process.
So, what is the blue book value and what are they offering? If you don't like what you are offered, ask for a copy of the valuation report IN WRITING (actually, you should really request a copy either way). Make sure it is accurate, and in particular, look for the condition they list your vehicle as (good, average, below average, etc.).
Good luck to you, and if you have any further questions, just ask!
Posted: Sat Oct 01, 2011 05:25 am Post Subject:
Kelly Blue Book is the MRP for vehicles. All car depreciate the moment they roll out of the showroom. True, no one pays KBB prices, because they can't. Car's depreciate very fast and can cost a lot less than their showroom values in just 6 months time. But you have the right to get the value of your vehicle according to the fair market values. So, you can compare prices before accepting what the insurer pays you.
Posted: Sat Oct 01, 2011 07:49 pm Post Subject:
(C) a computerized valuation service that produces "statistically valid" fair market values
Arguably, I think KBB could fit within this definition of "statistically valid", considering that many dealers and lenders continue to use it as a "measure" of a vehicle's value. That's what makes it valid. Is it computerized? Presumably. They aren't necessarily pulling values out of thin air. As long as the "statistical" sample is large enough to be representative, the validity would not be challenged.
It's the "accuracy" of their statistics that are called into question as far as insurance companies may be concerned. Notice that the CCR Section 2695.8(b)(4)(C) does not state "statistically accurate". Valid is one thing, accurate is another.
Nevertheless, you are correct in describing the process that insurers are obligated to use under the Fair Claims Settlement Practices Act. The Barclays book is an excellent reference, as are a few others. Great post!!
Posted: Sat Oct 01, 2011 08:46 pm Post Subject:
Problem is... even KBB does not represent their prices as "fair market value". They specifically state that they are asking prices and no more then a starting point for negotiation.
Posted: Sat Oct 01, 2011 09:05 pm Post Subject:
Thanks for the reply, Max.
It's the "accuracy" of their statistics that are called into question as far as insurance companies may be concerned.
I agree, but I would also think that brings into question the "statistical validity" of the numbers. I think we've all seen more or less the same used car ad: I'm asking $1,500 (or whatever) less than Kelly Blue Book! There's no way every car can sell below KBB without KBB being too high.
On the other end of the spectrum, the "computerized valuation service" used by the insurance company handling my case had spent millions of dollars settling class action lawsuits alleging they were under valuing people's cars. A few hundred dollars here and a few hundred dollars there can really add up! :)
Posted: Sun Oct 02, 2011 01:40 am Post Subject:
I agree on both accounts....
KBB exists so that dealers (who pay KBB) can make it look like they are discounting their vehicles below what they are worth.
Companies such as CCC are getting _way_ to aggressive in low balling their valuations. I see them double dip a lot.
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