How much will my insurance pay for a totaled car?

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Things to Remember...
  • Replacement value tends to pay out smaller claims
  • Full value will pay a higher price for the totaled vehicle
  • Auto insurance companies rely on external sources — two of those sources are Kelly Blue Book and Edmunds.

Having an accident serious enough to total your car is bad enough – worrying about how much your auto insurance company will pay can just make things worse.

Understanding how insurance policies are structured before you purchase one can alleviate this worry and save you a lot of trouble in the case of an accident. Planning ahead will give you a better idea of what to expect when your insurance check arrives.

Although they go by different names, there are only two types of auto insurance policies (as opposed to many types of auto insurance coverage options) you can purchase.

The first one, which is often called replacement value, tends to pay out smaller claims.

The other type of policy, commonly referred to as full value, will pay a higher price for a totaled vehicle. Keep in mind though, that a full value policy will also carry higher premiums.

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What types of replacement policies are there?


Think of replacement value as the amount an insurance company needs to pay to provide an exact replica of your current car.

For example, if you drive a 2004 Hyundai, your insurance company would write a check equivalent to what it would cost to purchase the exact same Hyundai in the same condition.

Insurance companies rely on external sources to assess this value — two popular sources are Kelly Blue Book and Edmunds.

Both of these resources are used by the National Auto Dealers Association (NADA) to determine the fair market value of used cars. They consider the production year, average mileage, average wear and tear, and so forth.

What is a full value policy?


A full value policy is one that pays out enough money to cover your car at its full market value regardless of its Kelly Blue Book or Edmunds price.

A replacement value policy doesn’t take those things into consideration while a full value one does.

If this is confusing, think of it in terms of a 1999 Honda Accord. At 12 years of age, the Kelly blue book value of that car might only be $2,500.

Yet, it may be worth a lot more in real terms if you have cared for it meticulously and installed thousands of dollars worth of customized parts.

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In order to make the best use of a full value policy, it’s extremely important to document everything. At the very least, you should be taking digital photos or videos to prove the condition of the car and the money you’ve invested in it.

Take pictures of any customized parts you’ve purchased. In addition, save all the receipts for any parts purchased, as this can be used to prove the true value of your vehicle

Another way to boost the value of your car is to do a comparison study of similar vehicles sold on the open market. Automotive magazines and websites are a great resource.

If you prepare beforehand, you will be able to prove the value of your car to your insurance company in the case of an accident. By providing more supporting evidence, you are more likely to get a check for the full value of your car.

What if I only have liability insurance?

Unfortunately, a car insurance company will replace a totaled vehicle only if you have purchased collision or comprehensive coverage. If you only have the state mandated minimum liability coverage, a totaled car will be your loss.

That’s why it may be worth purchasing the extra coverage if you have a loan on your vehicle. While if you’re simply driving your parents’ old family sedan, with 150,000 miles on it, it might not be as worth it.

Before you file a claim for a totaled car, you also need to be aware that your insurance rates will go up. For an inexpensive car, it might be better in the long run to pay out of pocket. This will keep your car insurance rates down.

Although it is not the best scenario, with a calculator and the right questions, you can try to maximize your saving.

Don’t wait until you total your car — start comparing auto insurance rates with our FREE tool today!

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