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There is More Than One Kind of Appraisal?


Usually when someone needs an appraisal, they know what the purpose is. Whether it’s for insurance value or fair market value, they either generally know what appraisal they need, or they’ve been told by a service provider what kind of appraisal they need.


However, there are many types of appraisals, and it’s not always obvious which kind is needed. I’ll go over some of the more common ones in case a question arises.





The most thought of appraisal type is what we call “Fair Market Value”. Fair market value is the number people are asking, generally, when they say “what’s it worth”? There is, however, a little more that goes into it than that. Our definition of Fair Market Value is “the highest price on the date of valuation that would be agreed to by a seller, being willing to sell, and a buyer, being willing to buy, and under no particular necessity for so doing, each dealing with the others full knowledge of all the uses and purposes for which the property is reasonable, adaptable and available.” That’s a lot of words to say, the highest price two conscientious parties would agree to. That value is determined by finding completed sales of comparable vehicles and adjusting for any differences such as mileage, options and modifications.

Replacement value is typically used for insurance valuation. Most insurance policies are written for Actual Cash Value, which is the cost of replacing the damaged property at today’s prices, minus deductions for depreciation. There is another type of insurance available called Agreed Value. This is the type of insurance typically sought by owner’s of classic, customized or vehicles that otherwise don’t have a book value, or for some reason will vary significantly from that book value. Examples are late-model pick up trucks with lift kits, oversized wheels and tires and other modifications. Another example are vehicles that are called “Resto-mods” which are usually classic cars that have had extensive modifications such as new engine and transmission, custom suspension and custom interior. Appraisals of this type take into account the cost of the “donor” vehicle plus modifications and other work done. Frequently the cost to build such vehicles is more than the market value, so an Agreed Value policy is necessary. Agreed Value policies are just that, set for the amount the owner and the insurance company agree to. There are insurance companies that specialize in collector vehicle insurance like Grundy and Hagerty who generally know values of collector cars. But, just because they know most values, doesn’t mean they always get it right. So, we do a lot of Replacement value/insurance appraisals.

Another type of appraisal is used when a vehicle has been in a wreck and is declared a Total Loss. The insurance company settling the claim will make a determination whether to repair a wrecked vehicle or declare it a total loss, meaning the repair cost exceeds the useful value of the car. Insurance companies typically use third-party information providers to determine the value of the vehicle in question. The two most common ones are CCC and Mitchell. They provide a valuation report that describes the condition of the wrecked vehicle and provides comparable vehicles that are currently for sale. It’s not uncommon that the owner of the wrecked vehicle disagrees with the value put on the vehicle. Assuming the insured is working through their insurance company, they have the right to an appraiser. The process is that they will hire an independent, third-party appraiser. This requires the insurance company to do the same. The two appraisers then work to settle the claim, both working on behalf of their client. The decision is binding on the insurance company. In rare cases where the two appraisers are not able to agree, there is the option to send the question to another third party appraiser called an Umpire. The Umpire then makes an independent decision regarding the value of the vehicle, which is binding on all parties. This can be a useful tool for vehicles that don’t fit the standard price book real well. Many times high-end luxury vehicles, vehicles with really low mileage or rare vehicles fit this category. If you have a total loss claim and don’t think the insurance company is shooting you straight, give us a call.

There is another type of appraisal that is prevalent on late-model vehicles, that’s the Diminished Value claim. Diminution of value occurs when a newer vehicle is involved in an accident and then repaired. Once repaired the vehicle will show up in the CarFax, or competitor’s, database. Even if the car is repaired perfectly to factory specifications, it will still be worth less than a vehicle that’s never been repaired. The owner may be entitled to compensation for Diminished Value if the accident wasn’t their fault, the vehicle is less than 10 years old and never been in an accident before. There is a two-year statute of limitations in Texas. If you think your vehicle and situation might qualify, give us a call right away. We’ll be happy to evaluate your situation at no charge.


There are other appraisals that professional appraisers do, but they are mostly variations of the above types. One type that isn’t really an appraisal is the Pre-Purchase Inspection. Appraisers commonly do these inspections because the required skills are similar. A PPI is done to determine any existing issues with a vehicle prior to a purchase. A lot of times these are done by people purchasing a vehicle from out-of-state. It is usually much more cost-effective to pay a local person to go inspect a vehicle than it is to travel to inspect it oneself. 



If you have a need or interest in any of these appraisal services in the Dallas/Fort Worth and surrounding areas, please contact Tony at Auto Appraisal Network.

Auto Appraisal Network of North Texas is part of a national group of professional auto appraisers. Our appraisals are the most comprehensive and complete reports available in the industry.  Our appraisers are certified and have the experience and knowledge to fairly and accurately asses the value of your vehicle. 


For more information on any of the services we offer, call us today at (469) 297-3350.



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There is More Than One Kind of Appraisal?