People can only anticipate what will happen on the road while driving daily to work, doing errands, or just traveling for relaxation. Sometimes, the least we expect is to be implicated in an accident that may impair your car. And if you have car insurance, you will naturally anticipate that the company insurance will deal with the costs for the damages inflicted on your vehicle. When the damages on your car are least expensive compared to the worth of your car, company insurance will deal with the costs of repairs. However, if the damages are more expensive than your car's worth, the company insurance will contend your car as a total loss. The company insurance will just compensate you for the ACV or the actual cash value of your car and not the entire amount of the needed restorations.

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How much will insurance pay for my totaled car? It is absolutely nerve-wracking to be tangled in an accident, taking care of your insurance entitlements. Be sure to equip yourself with all the needed information to discuss with your insurer. Find out what a totaled car means and answer the big question, “How much will insurance pay for my totaled car."

What Does Total Loss Mean?

Total loss may happen due to a crash, damages caused by weather-related events such as a hail storm, intentional or unintentional destruction of your car, etc. Even though company insurance can have diverse rules, they usually consider total loss if the vehicle suffered substantial damages and the repair costs will surpass a specific limit compared to the vehicle’s worth or if they determine that the car is beyond repair. In this situation, the vehicle will be considered what generally pertains to a totaled car.

What Does Totaled Car Mean in Auto Insurance Terms?

When the vehicle has been determined as a totaled car after involvement in an accident or unfavorable incidents, the expenses for repairs are way more costly than the expense of replacing one. Or if the vehicle is not safe anymore, even if repairs are done, nor can it be resumed to its original form.

So when the insurer concludes that your vehicle is a totaled car, the dilemma of how much will insurance pay for my totaled car will be the payment for the ACV or actual cash value. This is not automatically paying based on the amount you have financed for your car or the expense of getting a new ride. To give you an illustration, if the vehicle requires a $10,000 cost of repairs but the worth of your car before the accident was $5,000, the company insurance will therefore decide that it is totaled since it will be more expensive to repair it than the actual cost of the car.

Determining Your ACV (Actual Cash Value) for the Totaled Car?

Below are some of the things to determine your car's ACV (actual cash value):

  • Type of vehicle, model, make, and year.
  • If modifications are done to the car, such as additional gear or equipment.
  • The vehicle’s mileage as to how many miles the car has.
  • The present form of the vehicle’s engine, tires, interior and exterior.
  • The present market value or selling cost of the exact vehicle in the domestic trade or the place where you live.

How Much Will Auto Insurance Pay for My Totaled Car?

The question of how much will insurance pay for my totaled car is based on the coverage of your car insurance policy, and the amount may vary. Suppose you encountered a car crash or collision and have comprehensive insurance coverage. The insurer will compensate you based on the ACV (actual cash value) or the vehicle's fair market value once it decides that it is a totaled car, less applicable deductions, if there are any. Note that every insurance company has various ways of identifying the cash value.

Again, the fair market value does not necessarily mean the amount you paid for your vehicle or the outstanding amount of your car loan if it is under car financing. It is not at the expense of purchasing the exact new vehicle.

Types of Auto Insurance Coverage for a Totaled Car

There are four (4) kinds of auto insurance coverage if your vehicle is determined as a totaled car:

1. Collision:
This is when you have inflicted damages in a collision while driving your car, such as colliding with another vehicle or striking an object such as a lamppost or tree.

2. Comprehensive:
This is when you are not driving your vehicle, and the damages were caused by a non-related collision such as a storm, theft, or flood.

3. Property Liability Damage:
This is when another driver or vehicle knocks off your car. The coverage for the property liability damage should compensate for your vehicle's damages, assuming that the other car also has insurance.

4. Underinsured/Uninsured Motorist:
This is when your vehicle knocks off by someone driving without insurance or does not have insufficient insurance coverage to compensate for the totaled car.

What Is the Formula for the Computation of Total Loss?

Insurance company in most states uses the formula in the computation of the total loss with the following:

  • FMV. Pertains to the fair market value of the market before the damages inflicted.
  • RV. Pertains to the repair costs to fix the vehicle entirely.
  • SV. Pertains to the worth of your salvage vehicle being sold to the junkyard.
  • So when the RV ≥ FMV − SV, the vehicle is considered a total loss.

What Are the Necessary Steps to File an Auto Insurance Claim for a Totaled Car?

When your vehicle is considered totaled, below are the necessary steps to take for you to claim:

Step One: Contact the insurance company and file your claim after the accident or unfavorable incident that happened to your car.

Step Two: Evaluation of the damages to your vehicle. The insurer will ask for an adjuster to evaluate the damages to your car, which process a visual inspection to determine the amount of expenses for the needed repairs.

Step Three: Determining the vehicle’s actual cash value. The insurer will determine the actual cash value of your vehicle straightaway to conclude if the vehicle will be affirmed as a totaled car.

Step Four: If your vehicle is under car financing, you need to communicate with your lender. Let the lender know about what happened to your car and the damages. Carry on monthly payments to prevent a negative impact on your financial history. Once the insurer resolves the claim, they will pay your creditor.

Step Five: Discuss with the company insurance if you believe your vehicle's ACV evaluation is way low. You can convert it as a payout. However, you must prove that your car is more valuable than the amount the insurer is proposing.

Step Six: Suppose you have settled for a payout, but it will not be sufficient to purchase a new car to replace your previous one. Use the amount as an initial payment for a new car.


Final Thoughts on How Much Will Auto Insurance Pay for My Totaled Car

Involving in a car accident or unfavorable incidents that could damage your car is a stressful and challenging concern, much more the filing for a claim on the insurance company to cover the cost of repairs. But when the insurer concludes that it is a totaled car and provides you with a total loss claim, it is crucial to understand what will be at stake, especially in dealing with your insurer.

To ensure that you will get the perfect deal for your vehicle insurance, we strongly encourage you to seek the assistance of a reputable company to guide you in choosing the right insurer.

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