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How the Blue Book Value Affects Your Car Insurance

When choosing a particular car insurance policy, and making sure you receive the most advantageous car insurance rate, a knowledge of the Kelley Blue Book value of your car is not only beneficial, but essential. Let’s examine why.

The Kelley Blue Book is a used car valuation service that has been around since Les Kelley, the owner of the Kelley Car Company in Los Angeles, began publishing it in 1926. After the Second World War, it went from being a regional service to a national one, in response to the post-rationing demand for cars that swept the nation. Since then it has become the gold standard in the auto industry.

How the value of a car as determined by the Kelley Blue Book affects the car insurance rate is actually quite simple. If there is a bank loan on a used car, the bank will require that there be a comprehensive and collision insurance policy written on the car until they release their lien when the final payment is made. It’s a simple matter of looking at the tables in the Blue Book to determine the Actual Cash Value (ACV) of the vehicle, and writing the appropriate car insurance policy.

It’s well known that a new car depreciates drastically as soon as it’s driven off the lot. What isn’t always known to car buyers is that cars continue to depreciate in value year after year, and this is reflected in the latest edition of the Blue Book. That means that when a claim is made after a car has been severely damaged, the reimbursement will be on the current Blue Book valuation, and not on the price paid or the cost to replace the vehicle with a new one. What this sometimes means is that a car owner receives the ACV of the vehicle as a lump sum payment instead of the car being repaired or replaced. The savvy car buyer can cover this gap by knowing the car’s current Blue Book value, and buying Value Replacement Insurance, which allows for a replacement with the exact same car or a new car with the exact same specifications. Also, when the policy comes up for annual renewal, the buyer is insuring a car of lesser value than the year previous, and is entitled to negotiate a lower rate. So if you’ve bought a new or a used car and you are still required to purchase comprehensive and collision, make sure the rate is set for the current value of the car.

So if you are in the market for a car, new or used, get familiar with the Kelley Blue Book and shop online. It will help you spend your insurance dollars wisely.

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