why is there a law against ins co using a kelley blue book to help figure out a price to settle .?

Question

my ins carrier is progessive and they told me that even though i looked up kelley blue book estimates for the car i just totalled, they were not allowed by law to use anything but the nada for estimating costs. why is that and is it true?

Answer 1

Sounds like it's because they have a company rule that says so. Actually the Kelly blue book is not the most accurate source to set price anyway.

If you have coverage that will settle for at fault accidents, they will give you fair market value, adjusted for condition.

Answer 2

Wow, are you getting some bad advice! The real question is what car are you using to trade? If it's a big truck or SUV, the KBB value may be over stated. KBB pricing tries to stay up to date using different value sources, the auto auctions chief among them. Auctions only tell half the story. The dealer also has to look at current market conditions such as, what are current gas prices, how many of the same model are out there for sale right now, who will buy that wierd green color and how much will I spend in the shop to make it road worthy? In most states, you get the tax difference when you trade in a car. For example: Say KBB lists yur car's value at $11,000.00 and the dealer offers you $10,000.00 or your car. Let's say sales tax is 7%. That mean's you'll also get a $700.00 tax credit on your purchase, which makes a total value for you trade-in $10,700.00. Let's be honest, those brakes on your trade-in have been squeeking for some time and you never did get that dent fixded. Although KBB said you should expect $11,000, you understand that $10,700.00 is fair, considering the realistic condition of your car. The dealer, after sending the car through the shop, putting new brakes and tires a complete detail (ohh the dog hair!) on it and advertising then owns the car for about $11,000.00.

Answer 3

I don't know about a law - but insurance companies do not use Kelley Blue Book.

The industry standard is the NADA (National Automobile Dealers Association) book. When dealers sell a car they report in and the association uses that information to put the book out. The NADA values are more accurate. Kelley Blue Book values tend to be inflated (which is probably why you want to use that one).

If you read the fine print - Kelley says:

"Blue Book Suggested Retail Value
The Kelley Blue Book Suggested Retail Value is representative of dealers' asking prices and is the starting point for negotiation between a consumer and a dealer. This Suggested Retail Value assumes that the vehicle has been fully reconditioned and has a clean title history. This value also takes into account the dealers' profit, costs for advertising, sales commissions and other costs of doing business. The final sale price will likely be less depending on the vehicle's actual condition, popularity, type of warranty offered and local market conditions." (Taken from Kelley Blue Book web site)

Note: "THE FINAL SALE PRICE WILL LIKELY BE LESS DEPENDING ON VEHICLES ACTUAL CONDITION, POPULARITY, TYPE OF WARRANTY OFFERED AND LOCAL MARKET CONDITIONS".

Also Note: it says the KBB price is dealer asking price (not final sale price) and includes other costs that the insurance company is not responsible for (salesman commission, advertising, cost of doing business).

The insurance company owes the actual cash value of the vehicle - what the vehicle could have sold for (not what you would ask for it) given the vehicles condition, mileage, options.

The insurance company will not pay you based on Kelley Blue Book.

Answer 4

Interesting note about these "books"..KBB and NADA. They are simply guides. People seem the think the "values" are set in stone. There are so many variables that effect the ACV of a vehicle. The current example would be large SUV's. With the gas prices elevated, they do not bring a price near what the book's say they are "worth".

Answer 5

The only laws progressive must follow is their corporate by-laws. They must somehow determine a "fair market value" for your vehicle, remember, KBB and NADA are only guides to determine used vehicle values. I would suggest looking at as many cars similar to yours (on-line) and printing the results. this will give you a more realistic idea of what yours is worth, now, when progressive makes you an offer, you can show them something more tangible, and ask them to buy a replacement of equal value to yours, for their offer...

Answer 6

Insurerers often will use another service called CCC Information Services, Inc. These prices tend to be "lowball." This is one way the insurance companies try to reduce their payouts for claims. There is some good info about total loss insurace claims and price estimating at http://www.appraisalgroupofamerica.com/total-loss.htm

Answer 7

There isn't a law against it. It's just that most insurance companies don't USE it. KBB isn't ACCURATE.

Most insurance companies subscribe to a service that colates private party ads in the local newspapers. That number does seem to be CLOSE to the kbb private party sales values I've seen.