It happened. You were in an auto accident. You didn’t see it coming, and next thing you know – you’re on the phone with your insurance company working through the details.

First off, take a deep breath and relax. If you’re still healthy after the crash, everything is going to be ok. While you may be focused on the value of your car, it’s important to keep the big picture in mind.

Once the dust has settled, the value of your car may loom large. You want to know how much money you can get to fix or get a new car. We get that. So we wanted to break down exactly how an insurance company will determine the value of your car after an accident.

 

Replacement Cost vs. Cash Value

The difference between replacement cost and cash value can be huge in certain situations. Replacement cost is the amount of money you’d pay for your car at today’s prices. Cash Value is the amount you’d pay for a similar car at today’s prices. Cash value can also be seen as replacement cost minus depreciation.

Most of the time the cash value of your car is significantly less than the replacement costs. This number will be determined by the number of years the car has depreciated. If a car is totaled, it costs more to replace that car than the actual cash value of the car when the accident occurred.

If you selected the replacement value option when you purchased your car insurance policy, then the problem is addressed. However, this type of coverage increases the cost of your car insurance significantly.

Certain car owners are willing to pay the extra premiums for replacement value coverage. This will all depend on how much it would cost to replace the car. Depreciation and aging will play a huge role in this.

 

Determining Actual Cash Value

You can find your car’s actual cash value, but you’ll need some information, including:

 

• New or used

• Year

• Make

• Model

• Mileage

• Added features

• Condition of the car

• Zip code

 

 

Using this information, the insurance company will calculate the car’s actual cash value. Often, an insurance company will use the Blue Book value to determine the car’s depreciation.

 

Is My Car Totaled?

 

There is no exact way to determine if a car is totaled. Different insurance companies use different factors to determine the car’s cash value before deciding if the auto is totaled or not.

Things like total loss ratio come into play as the company makes this determination. Typically, a car is totaled when the actual cash value of the car is less than the repair costs.

Occasionally, the repairs cost less than the value of the car, but the car has exceeded the total loss threshold for your state. Then the company would still consider the car to be totaled.

 

Getting the Facts Straight

If you’re still wondering about the actual cash value of your car or curious about which type of policy to choose, we urge you to get in touch. With over sixty years of experience in the insurance industry, the agents at Protective Insurance Agency are here to help.