When your car is totaled in an accident, your auto car insurance company uses the car’s value to determine the amount they will reimburse you for repairs or help you buy a new car. As such, understanding how insurance companies value a car can help you ensure you’re adequately compensated for your valued car.
Generally, car valuation methods are esoteric, and, in fact, many auto insurers are careful not to reveal the particulars they use to determine the value of a client’s vehicle. However, this doesn’t mean you can’t get to know how car insurance in Singapore values cars. Valuation methods usually rely on abstract data that, when well understood, can give you an edge from which you can negotiate. After all, most drivers have had difficulty accepting how insurers value their cars.
This post will in-depthly look into how insurance companies in Singapore value cars to help drivers understand what compensation they’re entitled to after an accident.
How auto insurance companies determine the value of a car
No matter what type of auto insurance coverage you have, when you report an accident, the first thing that your insurer does is to send an adjuster to assess the damage. For the most part, the adjuster will start by comparing the cost to repair the damage and the vehicle’s market value. Getting the right car insurance quotes is crucial as it enables you to find the most suitable coverage at the best price, ensuring you get the necessary protection without overspending. By comparing quotes from different insurance providers, you can make an informed choice that aligns with your budget and provides adequate coverage for your car and personal needs.
From a driver’s perspective, it is difficult to determine exactly how insurance companies value cars because different companies use varied algorithms. Even so, there are a few factors that show up in nearly all formulas used to determine car value.
These include:
- The age of your car
- Total mileage of the car
- Physical wear and tear and history of accidents
Your insurer might also consider your car’s primary use and any modifications you have added. Although not as common, some insurance companies compare your car against the cost of similar vehicles for sale in the local area to get an idea of how much it would have been worth before the accident.
Importantly, while many drivers in Singapore think that the value of their car is equal to the amount they paid for it, the truth is that all cars depreciate. Surprisingly, the value of your car starts to depreciate immediately when you drive it off the lot. As such, the value of your car can be hundreds of dollars less than its original price, even when it is only a few weeks old.
Taking good care of your car and getting regular maintenance can help preserve its condition. This can help increase your settlement should you be involved in an accident and your car is totaled.
Conclusion
Understanding how Singaporean auto insurance companies value cars can be puzzling, even for veteran car owners. If you have entered into a contract with a certain insurance company, doing your due diligence to understand how they determine the value of cars can go a long to help you get a sense of how they will value your car should it be totaled or stolen. Hopefully, this post will help you get insights into how insurers value cars.
