Q: How is the ‘fair market value’ of my totaled vehicle determined?

A: When an insurance company ‘totals’ your car, the company must pay you what the car was worth before the accident occurred. This amount is called the “fair market value,” and includes adjustments for the vehicle’s features, mileage and prior damage. There are several firms that evaluate and publish automobile market values (like the well-known Kelly Blue Book) and the results can vary. Whether the insurance company uses one of these evaluation firms or does its own evaluation, the method the company uses must be documented and must comply with the procedures described in the Minnesota Fair Claim Settlement Act. You can ask to see the evaluation and ask how the fair market value was determined. If this information is not provided at your request, or if you believe it does not comply with Minnesota law, you should make a complaint to the Department of Commerce. You should check with dealers, newspaper ads, used vehicle publications, and other sources to gather your own information on your vehicle’s fair market value to compare with the value provided by the insurance company. You have the right to negotiate with the company if you believe your car was worth more than what they offer.

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