Fair market value is the price at which the vehicle would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or to sell and both having reasonable knowledge of relevant facts, taking into consideration the vehicle’s age, condition, mileage and other history. It is not necessarily the sales price or the amount that you have spent on the vehicle during its lifetime. It is not necessarily the amount of money you will have to spend on a new vehicle. When it comes to determining the fair market value of a total loss, property damage adjusters use the phrase “like kind and quality” (LKQ) to describe equivalent vehicles.
How is LKQ used to determine the fair market value of my car?
To establish the value of your vehicle at the time of a loss, the adjuster will find local, purportedly equivalent cars for sale. However, the adjuster’s list of LKQ cars and their selling prices – based on his or her supposed contact with numerous used-car lots – may include vehicles that are at the low end of the price scale that actually do not exist. These prices pull down the average fair market value on which the adjuster bases a settlement offer. Don’t be taken in by this deception. Demand to see a copy of the adjuster’s valuation report. This report will include details about the exact model of your vehicle and how it was equipped, including engine and extras. Make sure that the adjuster’s information is accurate. Then call each of the comparable vehicles listed on the adjuster’s LKQ list. Sometimes you will discover that the lot doesn’t even exist or that the salesperson does not have a car of the same LKQ as your damaged vehicle.
Once you can find errors in the valuation report, then you can introduce your own evidence of other comparable vehicles to determine the fair market value of your vehicle. What about the value of recent work performed on the vehicle prior to the loss? Please realize that some work and maintenance on a vehicle simply helps preserve a vehicle’s value rather than adding to it. This is particularly true of mechanical repairs and standard parts, such as batteries and tires. However, depending upon the timing and nature of the expenditure, you may be able to add some value to the vehicle. This must be examined on a case by case basis.