Vehicle Valuation Techniques Flashcards

Inherent diminished value refers to:

Answer: Loss in market value from the vehicle's accident history even after proper repair

Inherent diminished value arises because buyers pay less for a vehicle with a known accident history, even if perfectly repaired.

The widely criticized '17c formula' for diminished value starts by capping the base loss at what percentage of the vehicle's pre-loss value?

Answer: 10%

The 17c formula caps the base loss at 10% of value, then applies damage and mileage multipliers.

Repair-related diminished value results from:

Answer: Substandard or incomplete repairs

Repair-related diminished value is the loss caused by improper or poor-quality repair work.

Actual cash value (ACV) in a typical auto insurance total loss settlement generally means:

Answer: The fair market value of the vehicle immediately before the loss

ACV represents what the vehicle was worth in the market just prior to the loss, accounting for depreciation.

A state uses a total loss threshold of 75%. A car with an ACV of $20,000 needs $16,000 in repairs. It is:

Answer: A total loss, because repairs exceed $15,000

75% of $20,000 is $15,000, and $16,000 exceeds that threshold.

Under a total loss formula (TLF), a vehicle is totaled when:

Answer: Repair cost plus salvage value equals or exceeds ACV

The TLF compares repair cost plus salvage value against the pre-loss actual cash value.

Which factor typically has the greatest negative effect on value for a vehicle carrying a branded title?

Answer: The salvage or rebuilt brand itself

Branded titles commonly reduce market value substantially because of buyer reluctance and financing/insurance limits.