Guide

Why is the value lower than dealer prices?

The most common question about a valuation. The short answer: the report starts from dealer asking prices and applies the same condition adjustment to each one, because dealer-listed vehicles are treated as reconditioned. Here is the mechanism, and the two explanations that are wrong.

What the policy pays

Actual cash value: what this vehicle would have sold for immediately before the loss. Not replacement cost, and not the price of a similar vehicle on a dealer lot today. The gap between those two figures is what this page explains.

Where the comparables come from

Most comparable vehicles on a report are dealer listings, since dealer pricing is treated as the most reliable market signal. Every dealer-listed vehicle is treated as Above Average (dealer retail) condition, on the basis that dealers recondition before sale: tires, fluids, detailing.

Where the loss vehicle sits

Most total-loss vehicles are rated Average (sometimes labeled "private owner" or "good") on every component. To compare an Average vehicle against Above Average listings, the report applies a condition adjustment to every comparable. It is visible on the report as the same dollar figure subtracted from each one.

The amount scales with the vehicle's price tier: a few hundred dollars on an older economy vehicle, up to $5,000 to 6,000 on a newer or higher-end vehicle.

What the adjustment is, and isn't

• Not dealer markup.
• Not the dealer's reconditioning cost. Reconditioning costs about the same on a new luxury sedan and an older economy car, but the adjustment differs by thousands.
• It is the premium a typical buyer pays for a reconditioned dealer example over an average private-sale vehicle, based on the valuation company's market research. That is why it tracks price tier.

A quick check of which question applies

Base value + condition adjustment ≈ what dealers ask for a comparable vehicle. Do that math from the report.

• If that reconstructed figure looks right for dealer listings of this vehicle, the comparables are sound and any question is about condition.
• If it looks low even before the adjustment, the question is about the comparable vehicles.

Those are two different conversations, and it helps to know which one applies before making a request.

When documentation can recover part of it

If the vehicle genuinely was dealer-clean (detailed, no dings, clean interior, good tires), each component supported by evidence can be re-rated to Above Average, which recovers part of the adjustment. Useful documentation:

• Pre-loss photos.
• Service records. A dealer or higher-end shop may have reported service to the VIN history.
• A dealer purchase within the last month: the vehicle was at dealer-retail condition weeks ago.
• If the vehicle couldn't be inspected (theft, fire), Average is a default rather than an inspection result, and condition can be rated from documentation.

For an average daily driver, Average is the accurate rating. A buyer would pay more for the reconditioned example on the lot, and the adjustment reflects that.

Common questions

Is the difference between the value and dealer prices the dealer's profit margin?

No. It is a condition adjustment applied to every comparable vehicle, representing what a typical buyer pays extra for a dealer-reconditioned example over an average private vehicle. It varies by vehicle: a few hundred dollars on an older economy car, thousands on a newer or premium one.

How can I tell whether the comparables or the condition rating is the issue?

Add the per-comparable condition adjustment back to the base value. If that total matches what dealers ask for the vehicle, the comparables are sound and any question is about condition. If it is still low, the comparables are the question.

The vehicle was stolen and not inspected. Why is it rated Average?

Because it could not be inspected, and Average is the default rating. Pre-loss photos, purchase paperwork, and service records can support rating condition from documentation instead.