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How Is The Car Value Calculated When The Car Is Totaled?

car crashed into tree - totaled

Your insurance company is compelled to repair your car after an accident if the policy applies. However, the cost of repairing a seriously damaged vehicle can sometimes be unreasonably high (more than a certain share of the car’s current value), so the company will evaluate the car and compensate you. Companies have various approaches on how to determine the value of a totaled car, and here are two of the most commonly used ones.

Current market value

Given that the car you just lost wasn’t new, it goes without saying that, if you were to sell it before the accident, you would have got the same price you bought it for. The insurance company will survey the used cars market and pay you something in the range of what its current value is.

Replacement value

Other companies will evaluate the damage thoroughly and pay you, dollar for dollar (sometimes even a bit more), what it would cost to repair it. Such a process is more time consuming but is said to be the most accurate evaluation – at the end, you would, technically, be able to buy a vehicle in the exact same condition as your car was.

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