How do I know the value of my car for insurance?

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Here's what you need to know...
  • Find out the trade-in value of your car
  • Consider how much out-of-pocket expense you can afford when buying auto insurance
  • Decide how much coverage you will need to replace or repair your car
  • Compare rates for best deal before making a final decision

When shopping for auto insurance, one of the things you need to know is how much insurance to get. As is the case with any insurance, you need to get enough insurance to cover the value of your car based on how hard it would be to replace.

In other words, insurance is money set aside to cover the damages for loss so that you can get a new one or at least have the damage repaired.

Therefore, it is important to understand what your car is worth at the time you get insurance.

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How to Assess the Value of Your Car

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Several places are available to help you assess your car’s value.

These are just meant to be used as a point of references when you need to find out how much your car is worth before you search for auto coverage.

Kelly Blue Book is considered one of the foremost authority sites on figuring out the trade-in value of your car as it is today.

It is based on factors, such as the age of the car, the mileage, the make, model, and year, as well as the color and other vehicle options.

The information from KBB gives you today’s trade-in value that you would likely get if you tried to trade in your car today.

A Test Case

We did this as a test case on this site for a 2004 Pontiac Grand Am (Red) with a sliding sunroof with over 100,000 miles and in good condition. The system told us that the trade-in value would be around $1200.

Remember, if you were in an accident in which you totaled your car, it would take that amount of money to replace it.

However, it may be tough to find a car in the same condition as yours, with the same approximate number of miles, and with the same options.

Therefore, you will want coverage for at least twice as much, in case you need to use the money to purchase a similar vehicle that is worth slightly more than yours

Using our case study, if we needed to replace this Grand Am with another one of similar quality, we would need to carry at least $2000 of collision insurance to be on the safe side, in case we could not find one in the same condition as the one that was lost.

Keeping that in mind, you could compare via yours charts with various insurance coverages and see what totals are offered.

In general, the average amount of collision coverage in most auto policies is around $5000. In our scenario on the Grand Am, this amount would be more than enough to cover a total loss.

About Comprehensive Plans

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Many auto insurance companies offer comprehensive coverage which not only covers the loss in an auto accident but also applies to theft of property if your car is stolen or damaged by an act of God, such as a tornado, hurricane, or hail.

It is usually highly recommended for new cars.

You will want to inquire with your insurance companies to see if it is offered.

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How Insurance Companies Cover Large Collision Amounts

Remember that most accidents will not result in a total loss. Instead, they may require up to $5000 or more to repair.

When you are in an accident where damage is done to your car, after you file a claim, an insurance adjuster will come to your house or place of business and assess the damage.

They will take notes on the specific points of damage, as well as whose fault the accident was attributed to, and they may ask for a police report from the local police who covered the accident.

Once they have all of this information, they will leave and call you a few days later with an assessment of what it will cost to repair it.

Provided that you have ample collision coverage, the adjuster will also assess damages from two other sources such as local car mechanic garages.

Once you come back with these figures, the adjuster will tell you that you must take the lowest estimate. They usually like to err on the low side.

Your Rights

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Remember as a consumer you have a right to have your car repaired to as near new condition as possible. Mechanics and bodywork professionals should not take shortcuts to save money either for themselves or you.

They should use the money from the insurance company to repair your car to as good of condition as possible and rebuild any body work to the same condition as it was before the accident.

If you notice badly-done paint jobs or half-closed trunks after your accident, you have a right to appeal the adjuster’s decision to a lawyer or insurance settlement board.

Once you know the general value of your car, you can keep these figures in mind when shopping for insurance. Look at the other specs first, such as state liability amounts, bodily injury, and property damage.

These cover your costs to others if you are at fault in an accident. But focus on the collision insurance also, so that you know you are getting enough insurance to cover all damages and replacement if needed.

Figuring Deductible Amounts

The question of deductibles often comes up when searching for insurance as well and it is important. You will want to consider how much out-of-pocket expense that you can afford to pay to get your car fixed if you are in an accident.

For a $500 deductible, you would only pay $500 out of your pocket, and the insurance company would pay the rest. For a $1000 deductible, you would pay $1000, for example.

In the case of our Grand Am, with a $1000 deductible, this person would end up paying all of the replacement costs. With the 2016 Honda Civic, it would be a substantial saving if the damages were significant.

The key to finding the best insurance and deductible amounts is to shop around until you see that you have found one that covers your cost of either repair or replacement in the event of an accident, and which does not require you to pay too much of an out-of-pocket expense for the repairs.

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