Kentucky Auto Insurers Mandate Blue Book or J.D. Power for Vehicle Valuation

Kentucky Insurers Now Required to Use Kelley Blue Book or J.D. Power for Vehicle Valuations

FRANKFORT, KY – Kentucky insurance carriers are now operating under new guidelines for determining the value of wrecked or totaled vehicles, following the implementation of Senate Bill 136 on July 1st. The bill,passed as an emergency measure by state lawmakers,mandates the use of either Kelley Blue Book or J.D. power valuation guides when settling claims.

The change stems from a 2017 acquisition of NADA Guides by J.D. Power. Kentucky law previously specified NADA Guides as the standard for insurers, leaving a gap in regulations when the ownership changed. attempts to update the law in 2024 stalled, leaving insurers without clear direction and potentially vulnerable in claim settlements.

SB 136 directed the Kentucky Department of Insurance (DOI) to identify “nationally accepted car valuation guides,” ultimately recognizing Kelley Blue Book and J.D. Power as meeting that criteria.

“Carriers may now utilize either the Kelley book or the J.D. Power guide,” explained Chris Nolan, executive director of the Insurance Institute of Kentucky.

Initial comparisons show the guides offer similar valuations. For example, a 2024 Toyota Prius was valued at $24,701 by Kelley Blue Book and $24,550 by J.D. Power.

The DOI is currently accepting public comments on the emergency rule change through August 31st, via email to Shaun.Orme@ky. A public hearing is scheduled for August 25th, wiht a further hearing on September 23rd to discuss a permanent rule change following the expiration of the emergency regulation.

While the new rule provides clarity, some insurers still prefer alternative valuation systems like CCC Intelligent Solutions, which has faced past scrutiny. Further regulations from the DOI might potentially be necessary to address these ongoing concerns.

Link to SB 136

What steps should a Kentucky driver take if they disagree with the vehicle valuation provided by their insurer after a total loss?

Understanding the New Kentucky Vehicle Valuation Standard

Kentucky auto insurance companies are now required to utilize either Kelley Blue Book (KBB) or J.D. Power for determining the Actual Cash Value (ACV) of a total loss vehicle. This change, implemented to standardize vehicle valuations and ensure fairer settlements for policyholders, impacts anyone involved in a car accident resulting in a total loss claim.This article breaks down what this means for Kentucky drivers, the benefits of the new standard, and how to navigate the claims process. Key terms to understand include total loss, ACV (actual Cash Value), vehicle valuation, and insurance settlement.

Why the Change in Kentucky?

Previously, Kentucky lacked a standardized method for vehicle valuation. Insurers could use a variety of sources, leading to inconsistencies and disputes over settlement amounts. This new regulation aims to:

Increase Openness: Providing a clear framework for how vehicle values are persistent.

Reduce Disputes: Minimizing disagreements between insurers and policyholders regarding total loss claims.

ensure Fair Settlements: Guaranteeing that drivers receive a fair market value for their vehicles.

Standardize Practices: Creating a level playing field across all Kentucky auto insurance providers.

This shift addresses long-standing concerns about fair claim settlements and insurance claim disputes within the state.

Which Valuation Guide is Used: Kelley Blue book vs. J.D. Power

Kentucky insurers now have a choice between two leading vehicle valuation resources:

Kelley Blue Book (KBB): A widely recognized and trusted source for vehicle pricing, KBB considers factors like vehicle condition, mileage, and location. KBB offers different valuation reports, including Private Party Value, Trade-In Value, and Suggested Retail Value. Insurers typically use the Private Party Value for total loss calculations.

J.D.Power: Known for its extensive data and analytics,J.D. Power provides vehicle valuations based on real-time market data and transaction prices.Their valuations are frequently enough considered highly accurate and reflect current market conditions.

Both KBB and J.D. Power are respected in the auto insurance industry for their accuracy and reliability. The choice ultimately rests with the individual insurance company.

How Vehicle Valuation Works in a Total Loss Claim

Hear’s a step-by-step breakdown of how the valuation process typically unfolds:

1. Vehicle Inspection: The insurance company will inspect the damaged vehicle to assess the extent of the damage and its overall condition.
2. Data Gathering: Details about the vehicle, including its year, make, model, mileage, options, and condition, is collected.
3. Valuation Report: The insurer uses either KBB or J.D. Power to generate a valuation report based on the collected data.
4. ACV Calculation: The Actual Cash Value (ACV) is determined by subtracting the vehicle’s salvage value (if any) from the valuation report’s value.
5. Settlement Offer: The insurance company presents a settlement offer to the policyholder based on the calculated ACV.
6. Negotiation (If Necessary): Policyholders have the right to review the valuation report and negotiate the settlement if they believe the offer is too low.

Understanding the total loss claim process is crucial for a smooth experience.

What if You Disagree with the valuation?

If you disagree with the insurance company’s valuation,you have several options:

Request the Valuation Report: Ask the insurer to provide a copy of the KBB or J.D. Power report they used.

Provide Your Own Valuation: Obtain your own valuation report from KBB or J.D. Power and present it to the insurance company.

Independent Appraisal: consider hiring an independent appraiser to assess the vehicle’s value. (Check your policy for coverage of appraisal costs).

Mediation: Some insurance policies offer mediation services to help resolve disputes.

Legal Counsel: If you’re unable to reach a satisfactory resolution, consult with an attorney specializing in insurance law.

Benefits of the Mandate for Kentucky Drivers

This new regulation offers several key benefits for Kentucky vehicle owners:

Increased Confidence: Knowing that valuations are based on standardized, reputable sources.

Reduced Stress: Minimizing the potential for lengthy and frustrating claim disputes.

Fairer Compensation: Receiving a more accurate and equitable settlement for your total loss vehicle.

Improved Transparency: Having access to the valuation report used by the insurance company.

Practical Tips for Total Loss Claims in Kentucky

Document Everything: Keep detailed records of all communication with the insurance company, including dates, times, and names of representatives.

Gather Vehicle Records: Collect maintenance records,repair bills,and any documentation that supports the vehicle’s condition and value.

Understand Your Policy: Review your insurance policy to understand your rights and obligations in the event of a total loss.

Don’t Accept the First Offer: Carefully review the settlement offer and don’t hesitate to negotiate if you believe it’s too low.

**Know Your