5.0 Mustang & Super FordsNews & Views
Appraisals and Insureance Companies: The Difference Between Cash And Crying
If You Love Your Mustang, Have It Appraised Before Something Happens
Wendy Bradshaw tells every vintage Mustang owner she knows to have their car appraised. She speaks from experience, because it's her concours '67 Mustang GT that's pictured here. Wendy's car was damaged in an accident while she was en route to the 30th anniversary celebration of the Mustang at the Charlotte Motor Speedway. Her car achieved fame when former President Bill Clinton autographed its damaged fender. It was a nice gesture by Mr. Clinton-but let's face it, even though the car wound up on the front cover of this magazine and in articles about the mishap, it still wasn't a pretty sight. Wendy was lucky. She was able to restore the car to its former glory with the help of Big Ed Gaczek-a local restorer-and a cooperative insurance company.
Although her story had a happy ending, many don't. In many states legislation requires insurers to total a car if the repair estimate exceeds 80 percent of its value. And guess what? The insurer sets the value unless there is an "agreed or stated value" policy with the same insurer who is paying to repair it. It's sort of like letting the fox guard the chicken coop. Try getting that insurer to pay for repairs once they've determined that your vehicle was totaled!
If this happened to you, your first thought might be to call an attorney, but think again, because insurance companies retain attorneys. An option is to call an automotive appraiser. Obtaining a well-seasoned appraiser is an effective means of dealing with an insurance company under these circumstances. Considering your car is worth more than the insurer believes, a qualified appraiser and his appraisal could save it from being totaled. His report can also serve as documentation of the vehicle's condition prior to damage, which can help get it back to the way it was.
States that regulate insurance companies often require them to provide some type of mediation option for consumers who don't agree with their resolve. The premise is that mediation prevents potential litigation, which in turn unclogs their court systems. Regulations vary from state to state, so read your policy or call an appraiser who is familiar with the procedure. For instance, New Jersey law allows both parties to call upon an umpire to help settle their differences. Both must pick a mutually agreed upon third party as the ump. A wise choice is to look for seasoned people to fill that position (unbiased appraisers). Although in New Jersey the outcome is nonbinding, an experienced umpire can usually help both parties come to an amicable settlement. Your alternative is to hire a battery of attorneys-along with a value expert (an appraiser)-and take your case to a judge.
Once you purchase a Mustang (or if you already own one), your number one priority is to have that Mustang appraised by a credible appraiser before something happens. This will help in avoiding the high costs associated with arbitration or visiting the judge.
Simply ask your agent or call one of the specialty insurers to discuss their company policy. Make sure the companies you choose offer terms you can live with. Check out mileage, other restrictions, and whether their policies are either stated or agreed value types. Do not let them convince you of not needing an appraisal, even if you are in a hurry to get your steed on the road.
If they say they can insure it for $10,000 and you know it's worth more, explain that you will have it appraised and want it insured for that appraised value. Stated or agreed value policies are not limited to the old Mustangs. I have written many appraisals for companies that offer them for late-model collectible Mustangs too!
When insurers not requiring appraisals use a threshold, which is a maximum amount for which they will insure a vehicle, they are probably hedging their bets. After all, a threshold indirectly leads to doubt about real value, condition, or existence. I know that insurers are better off too with the appraisal, since they dispel those doubts. Insurers can change a threshold amount. I encountered a company that suffered a major loss on a car because it provided coverage based upon a scale price only, not realizing that the buyer had overpaid. The company's policyholders were pressured to accept the lower value's threshold, have it appraised, or move on to another company.
In the event that a third party claim occurs (that's when someone else damages the vehicle), the insurance company will only help collect the value for which the vehicle is insured. So if you're underinsured, you're on your own. Imagine trying to explain to another insurer or judge that you insured the vehicle at one amount even though it's actually worth more.
Appraisals also help prevent totaling your Mustang when your value exceeds your coverage. When your Mustang is totaled, the insurer is required to issue a salvage title. This affects a vehicle's value and raises doubts about its condition.
Another reason to have it appraised is, wise collectors demand good documentation-a by-product of a good appraisal. An appraisal that is well written should also provide enough proof to convince a judge, a jury, an insurer, a lender, or even the folks at the IRS that its value is accurate and that the appraiser is credible.
In light of all of this, selecting an appraiser is a decision you should take seriously. I suggest you do your home-work when retaining an appraiser. For instance, make sure you choose a qualified professional. An appraiser that is court-qualified or certified is your best bet to insure your investment.
To locate a certified appraiser near you, call the International Automotive Appraisers Association (IAAA) at (201) 391-3251 or e-mail firstname.lastname@example.org or visit the Web site www.auto-appraisers.com.