More Info About How Insurance Companies Handle Totaled Cars

If you got into a really serious car crash, chances are that your car was severely damaged. If the car is beyond repairs or the repair costs will surpass its current value, the car will be declared “totaled”. Nobody wants to hear this verdict, but it is important to know what happens next and how insurance companies handle totaled cars. Check our blog for more info and free online auto insurance quotes.

gap-insurance-1One constant for all insurance companies is that total loss is a function of how much it will cost to repair a car versus what an insurance company will have to pay out in a total-loss claim. If it costs more to fix the damage minus your deductible than the market value of the car, the insurance company will declare it a total loss.

The insurer owes you the actual cash value of your totaled car. If you and the insurer can’t agree on the retail market value, the insurer must follow the total loss rules outlined in state regulations. These rules allow the insurer to choose one or more of the following methods to determine the value of your car:

  • Offer to replace your car with an available and comparable car ( in your local area.
  • Offer you a cash settlement based on the actual cash value of comparable cars in your local area.

If you and the insurer agree, the insurer may use other appraisal methods, such as independent auto-value guides (Kelley Blue Book, NADA, etc.).

With your permission, the insurer may extend the search for comparable cars beyond 150 miles. The insurer must add to the actual cash value any applicable taxes, license fees and other fees required to transfer ownership. In order to check the value proposed by the insurer, ask for “total loss valuation report”, which shows the comparable auto data the insurer used to calculate your vehicle’s value. If you and your insurer can’t agree on your car’s value you have the right to hire an appraiser.

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