Press Release (ePRNews.com) - NANAIMO, British Columbia - Jun 17, 2017 - Have you ever been in an automobile accident, received or accepted the Insurance Company’s first settlement offer? Did you think you had to accept it and had no way of negotiating a fair settlement?
I used to think that YES was the answer to both questions. That is until I became educated and learned how to deal with insurance companies. You do have the right to question their valuation, and even reject them, if you believe that it is not fair compensation for your loss. After reading this article, I hope that you will be more educated, understand the process involved, and make an educated decision compared to saying YES and accepting the first offer the insurance company gives you.
Lets discuss how Insurance Adjusters come up with their valuation. Many adjusters use a program called Autosource. This program takes the average asking price of vehicles that are for sale, or sold, in the area of the insured. You may be asking, “what’s wrong with this?” This may sound exactly what is required for an accurate valuation. Well it is, with a few exceptions.
Before any kind of average can take place, the asset must first be comparable. You can’t take the average price of 3 cars that are in different conditions and mileage, with different asking prices, and call it the base price. Taking the average of the asking price of vehicles with mileages ranging from 75,000 km to 300,000 km without making adjustments, give a very unrealistic valuation. For example, car #1 has 75,000 km and is in excellent condition. The asking price is $25,000. Car #2 has 225,000 km and is in average condition. The asking price is $15,000. Car #3 has 300,000 km and is in poor condition. The asking price is $8,000. The way insurance adjusters come up with the base price is by averaging the 3 cars value. So with this formula, you had a car with 100,000 km and in excellent condition. The insurance adjuster will offer you a base price compensation of $16,000. They don’t take into consideration the mileage or make any mileage adjustments to the value before they come up with the average base price. Just by factoring in a mileage adjustment, the base price is now $18,500. That’s a difference of $2,500 in your favor and we haven’t even looked at an adjustment for condition of the vehicle.
When the Autosource program determines the base price, it does so without taking into consideration the condition of the asset. It considers that all the samples are of the same physical and operating conditions. Once again, if your vehicle is in excellent shape, the Autosource program will give your vehicle a much lower value due to the use of the poor condition comparables. The insurance adjuster will then, after the false base price has been determined, make adjustments for condition, mileage, special options or features, modification, and any new parts added to the vehicle, at well below Fair Market Value. By this method, the insurance company is short changing you and offering a low settlement.
It is like taking the average of apples and oranges, and calling them apples. It just simply doesn’t work that way and yet this is how the insurance adjusters make their valuations and how they offer you a settlement. The base price must be obtained by using equally adjusted comparables before the average base price can be determined.
Another thing I’ve noticed with some of the Insurance Company Adjusters, is that they do not even have an Appraisers Designation or belong to any organized group of appraisers like CPPAG. Anyone not being trained or educated by an organization that gives a designation that is recognized in any Court of Law, should not be accepted as a valid appraiser. By not having the training or education, I doubt that they are even aware of USPAP (Uniform Standards of Professional Appraisal Practice) or that their valuations are USPAP Compliant. In North America, USPAP is recognized as the generally accepted appraisal standards for the industry.
When our appraisers make comparables, they make adjustments to the values of assets before taking the average of them. They ensure that all the apples are apples! We use realistic mileage adjustment values and condition values when making adjustments to the assets. We follow the strict qualifications, standards, and practices of USPAP. My article, “The Appraisal Process Explained”, describes how a qualified, professional appraiser preforms an appraisal within the CPPAG and USPAP standards.
Before accepting any offer from the insurance company, please have an appraiser give you a second opinion. The cost of an appraisal versus the insurance settlement, in most cases, is to your benefit and easily recovered within your settlement. Don’t be afraid to ask for qualifications and designations when dealing with appraisers or adjusters. If they have no designation, their valuation may not stand up in a Court of Law and they should not be doing your appraisal.
Having been in an automobile accident in the past and having settled with the insurance company’s first offer, I believe I would do things differently today. I would first ask if they have an appraisers designation, do some research, and possibly hire an appraiser to contest the insurance company’s offer, if I feel that it is too low. Now that you have some understanding of how Insurance Companies do their valuations, you may agree with me, get that second opinion, and fight for your right to get your fair compensation. It’s a small investment that can have great rewards!
Don’t hesitate to contact DB Appraisals Ltd for your free consultation. We specialize in Automobile Insurance Claims and can get you the appraisal valuation that is true, accurate and fair. Our appraisals are USPAP compliant and are recognized in a Court of Law!
Visit https://dbappraisalsltd.ca/ for more details!
DB Appraisals Ltd