When Does Insurance Total a Car

When Does Insurance Total a Car? One of the most useful times to have an adequate auto insurance policy is if your vehicle sustains major damage from an accident, vandalism or the environment. If you have coverage for the type of damage, you face the possibility that your insurance company will declare your vehicle a total loss, or"totaled,"and write you a check to purchase a similar replacement vehicle rather than paying for repairs. Have a question? Get an answer from a personal finance professional now! Total Loss Each insurance company has its own policy for determining whether a damaged car represents a total loss. The general formula for determining loss is the car's cash value before the accident minus the cost of repairs. This means that if your car was old and not worth very much launch creader crp123, it will take a smaller amount of damage to cause a total loss crp123. On the other hand, a new vehicle with a high value must sustain damage that's more expensive to repair before it will be a total loss. Factors to Consider Several smaller factors figure into judging cars as totaled. One is the cost of a rental vehicle during the time it takes to repair your vehicle. Another factor is the depreciation that your car will sustain; even after it's repaired, its accident history will reduce the amount you can likely sell it for in the future. Finally, the salvage or scrap value of a damaged car figures into the final decision. For an insurance company to determine that a car is totaled, its pre-accident value minus its scrap value must be less than the sum of the repairs cost, the cost of a rental car and the cost of depreciation. Determining Value To decide if a car is totaled, your insurance company will attempt to determine the car's actual cash value, or ACV, before the accident. Most insurance companies look at the age of the car, its mileage, the region where you live and the average resale price of similar cars. The tax and registration costs of a new car are also part of the equation, since your insurance will need to cover the full cost of a replacement vehicle if it decides to declare your car a total loss. Getting Involved Even though your insurance company will handle the details of deciding whether your car is totaled, you can still play a part in the process. While waiting for word from your insurance company; do your own research and try to determine how much your car was worth before the accident. Look at local classified ads or check an online car value estimator. If the insurance company's value is much lower than yours, ask it to reconsider and present your research to show why the value should be higher. Not only can this make it more likely that your car will be a total loss, but it will also increase how much the insurance company pays for a replacement vehicle.
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10 Aug 2015