How Much Will My Insurance Pay If My Car Was Totaled?

by Gregory Hamel

A serious car accident can cause damage that costs thousands of dollars to repair. If it is cheaper for an insurance company to replace your car than to have it repaired, the car is a total loss. The amount your insurance company gives you for a total loss depends on the types of insurance coverage you carry and the specific terms of your insurance policy.

Total Loss

Your insurance company may declare that your car is a total loss even if the damage done to the car is less than its actual value. When determining whether a car is a total loss, insurance companies factor in the cost of providing you with a rental car while the car is being repaired and the salvage value of the car. According to Fox Business, cars are typically considered total losses if the damage exceeds 70 percent of the car's value.

Insurance Coverage

Your insurance company might not pay anything for a totaled car depending on the circumstances of the accident and your auto insurance coverage. If you were the cause of the accident, any damage done to your car is covered by your auto collision insurance. Collision insurance is optional, so if you decide not to carry collision insurance you get nothing for a totaled car in an accident that is your fault. If the other driver is at fault, his insurance is generally responsible for paying for the damage. Damage caused by non-driving events like fires and storms is covered by comprehensive auto insurance, which is another type of optional coverage.

Actual Cash Value

Most auto insurance policies pay you the actual cash value of your car if it is totaled. Actual cash value is the market value of the car at the time of the accident. Insurance companies determine the actual cash value by comparing the value of a car before a crash to cars of the same model, make and year in your area. Used car guides like Kelly Blue Book can provide a basic estimate of actual cash value, but the insurance company payouts may be less than buying guide values.

Agreed Value

Some car insurance policies pay an amount that is agreed upon in advance if a car is totaled. Agreed value car insurance policies are typically taken out on unique or valuable cars like sports cars, classic cars, antique cars and customized vehicles. Agreed value plans might have special terms and conditions like restrictions on mileage and commuting or requiring the installation of anti-theft devices like alarms and tracking devices.

About the Author

Gregory Hamel has been a writer since September 2008 and has also authored three novels. He has a Bachelor of Arts in economics from St. Olaf College. Hamel maintains a blog focused on massive open online courses and computer programming.

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