by Guest » Sun Feb 10, 2008 06:21 pm
my bank says I have to continue making a payment on a vehicle that was totaled. I carry Gap Insurance. My Auto Insurance company paid off over half the loan. Do I still need to make the payments?
Posted: Wed Feb 13, 2008 10:30 am Post Subject:
yes...you should be fine, generally gap policys will not cover deductions from the ACV for prior unrepaired damages, loans attached, or sales tax, extended warranties etc, that are attached to the loan...
Posted: Wed Feb 13, 2008 09:04 pm Post Subject:
InsTeacher
Posted: Tue Feb 12, 2008 5:35 pm :[/b} Post subject: my bank says I have
Many people are of the opinion that when you total out a car, you should be paid what it would cost you to replace that car. Automobile losses are settled on an "Actual Cash Value" (ACV) basis. For simplicity- consider the ACV the depreciated value. Many cars lose a lot of their value once they're titled and off the car lot. Ask any Dodge car owner that one!
Your confusing me. Wouldn't the "Actual Cash Value" ($$$) of ones loss be the amount it would take to replace the Totaled automobile with one exactly like it?
Same condition[b]: low or high mileage, dents or no dents, rust or no rust. etc.
Plus Sales tax, title fees, tow bill(s), rental, etc.
Just asking.
FK
Posted: Wed Feb 13, 2008 10:10 pm Post Subject:
Your confusing me. Wouldn't the "Actual Cash Value" ($$$) of ones loss be the amount it would take to replace the Totaled automobile with one exactly like it?
I can understand your confusion, as many people are confused with the terms "actual cash value" and "replacement cost."
First of all, let me define those terms as used in the insurance world:
Actual Cash Value (ACV): The cost of replacing damaged or destroyed property with comparable new property, minus depreciation and obsolescence. For example- a 10-year old living room sofa will not be replaced at current full value because of a decade of depreciation. In our situation, ACV generally brings into play what you suggested:
Same condition: low or high mileage, dents or no dents, rust or no rust. etc. Plus Sales tax, title fees, tow bill(s), rental, etc.
The insurer is concerned about mileage, damage, etc. when considering how much the ACV actually is. Cars are weird here- you can take two people who have purchased the [b]exact same car and you would typically have, at some future time, two different ACV determinations. As far as towing, rental coverage, etc., those would have to have been endorsed onto the policy to apply in most circumstances. Now, onto
Replacement Cost: The full cost to replace a damaged beyond repair or destroyed piece of property with like kind of materials, quality and functionality as the damaged or destroyed property, without subtraction for depreciation. In other words, a replacement coverage would not consider what you had that was lost, but only what you lost would cost to replace it with like kind and quality today. For example- you totalled out a 2003 Cadillac and the insurance would buy you a brand-new 2008 Cadillac. In looking at the sofa example above- instead of compensating the insured for a 10-year old sofa, it would pay for a brand-new sofa. There are some auto policies that will offer replacement coverage, but it has to be a (generally) vehicle that's either current model year or one-year old at the time of the total loss.
In conclusion, even though it sounds like cars are covered at replacement cost, they aren't. Most adjusters will look at vehicles that are comparable for valuation purposes, but that's about as far as it goes. It's up to the insured to prove if his totalled vehicle is worth more than the "average" vehicle. Recent engine work? New tires? New paint? Those types of things will, with proof, alter the ACV evaluation.
I have no idea of whether this will help. LORI!!! Could you put your two cents in here?
InsTeacher 8)
Posted: Wed Feb 13, 2008 11:51 pm Post Subject:
LORI!!! Could you put your two cents in here?
Oh I don't know ONLY two cents? I'm a little windy-er than that! :roll:You've nailed it..(you never need my help Teach)..ACV is NOT replacement value, it is the well the ''actual' value (not what it costs to replace or what you paid or what you owe) of the vehicle the way it sat, prior to the accident...which includes depreciation in value for certain things...of course mileage/options/lack of options, then the dreaded 'pre-existing' damage....When your car totals (and I hear this about every 10th total) your carrier is not required to 'replace' that vehicle...I get people that say to me...'fine, you just replace it then' (when they aren't happy with the ACV)...not the way it works...
Here is it directly from (MO) the policy (A-20.5-A)...
COMPARABLE VALUE (crap when did they get rid of ACV?--haha)--means....The depreicated worth of the vehicle or part immediately before the accident.
Posted: Thu Feb 14, 2008 01:11 am Post Subject:
See how short _I_ can make it... replacement value = brand new car. ACV = what similar year/make/model would cost.
Posted: Thu Feb 14, 2008 03:29 am Post Subject:
InsTeacher Posted: Wed Feb 13, 2008 10:10 pm
subject: my bank says I have
In conclusion, even though it sounds like cars are covered at replacement cost, they aren't. Most adjusters will look at vehicles that are comparable for valuation purposes, but that's about as far as it goes. It's up to the insured to prove if his totalled vehicle is worth more than the "average" vehicle. Recent engine work? New tires? New paint? Those types of things will, with proof, alter the ACV evaluation.
I have no idea of whether this will help. LORI!!! Could you put your two cents in here?
InsTeacher
Thank you.
I actually think I understand the difference. Although some parts are very similar.
One thought, you mention a few items that may increase the value like Tires & Paint. With "New Paint" would that apply to only a complete paint job or would smaller areas still increase the value? And tires would one new tire add value or would it need to be a set?
FK
Posted: Thu Feb 14, 2008 04:42 am Post Subject:
Normally, insureds do not buy just one tire. They buy a set of four, or perhaps two. If they bought just one, there's a good chance the tire was not worth a lot.
Posted: Thu Feb 14, 2008 11:19 am Post Subject:
See how short _I_ can make it
show off......."New Paint" would that apply to only a complete paint job
yes, or a custom paint job (which would generally be the entire vehicle as well)or would smaller areas still increase the value
NO this wouldn't increase any value, and another good point on both over all and repaired area paint, they ''could'' lower the value if its a low quality job...I've seen some 500 paint jobs, most by a company that sounds like...'something' OO...that are horrific! those actually lower the value...RE: the tires...when you are determining the ACV of a vehicle it is a given that the tires are of 50% tread, any over that (say they are new, most have 11/32nds of tread), most carriers 'can' add that additional 5-6/32nds of tread to the value...most won't mess with it to be honest...I always gauge tires when I'm doing an ACV, if the owner has just bought new tires, many times they will want to 'swap' them out...which is fine as long as they put some on the total that will hold air etc....rarely (I never have) would you dock an acv for 'bad' tires....you have to remember that things that are maintence items do not add value, ie 'i just put new brakes on and changed the oil' sorry, I can't add for that...the ACV assumes the vehicle on a good used car dealers lot 'front line ready'.
Posted: Sat Feb 16, 2008 06:13 am Post Subject:
People do think that doing actual maintenance will increase the value of the car? like how does an oil change make the car worth more I wonder? I guess everyone has their way of thinking? So really a car would keep increasing in value as you maintenanced it right?
Posted: Sat Feb 16, 2008 11:38 am Post Subject:
People do think that doing actual maintenance will increase the value of the car?
Yes, people think and say this all the time, but NO it does not increase the value...Add your comment