How does the insurance company calculate the fair market value for a total-loss vehicle?


Quick Answer

Insurance companies calculate the fair market value or actual cash value of a totaled vehicle by comparing the sales prices of similar vehicles in the same region as the totaled vehicle, says Geico. They also consider the condition of the vehicle before the damage, such as mileage and upgrade options.

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Full Answer

The factors that insurance companies use to determine the actual cash value of a vehicle vary from one company to another and state to state. Vehicle owners should conduct research before they accept an offer from their insurance companies, says Edmunds.com. If vehicle owners believe an offer is too low, they should ask for an adjustment. The law requires insurance companies to offer their customers a fair price for their vehicles.

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