Have you ever asked yourself, ‘how much will insurance pay for my car’?  This question comes up most often when determining if you should carry “full coverage” as well as after you have been in an accident!

In this article we will shed light on this important question by looking at the following:

How Does An Insurance Company Determine The Value Of A Totaled Car?

The insurance company determines the value of your car using software programs that determine a vehicle’s value.

Key information about the vehicle is entered into the program:

  • The VIN (Vehicle Identification Number)
  • Mileage
  • Overall Condition

The program uses this data and compares it to valuation data to similar vehicles for a given locality.  Once this is done, a valuation estimate is produced.

In general, this value is meant to represent the condition your vehicle was in before the accident occurred.

Let’s take a look at an example:

Assume you were driving a 2010 Chevy Tahoe with 100,000 miles in good condition. The insurance company should give you an amount of money that a 2010 Chevy Tahoe with 100,000 miles is worth.

This value will more than likely not be enough to go purchase exactly what you had outright. That same vehicle with the same mileage is worth more sitting on a car lot.

Why? You must consider things such as tires, inspections, cleaning, repairs, etc. that the dealership must provide to get the vehicle “lot ready”. By the time a dealership is done prepping a car for the lot, it’s already in better condition than one being driven daily.  While this not be the ideal answer when you ask how much insurance will pay for my car, it is the fair answer!

If you don’t like the amount that you are being offered from the adjuster, remember that it’s your right to escalate the claim. The adjuster has a boss they answer to, so you can always try to get a second opinion.

Jack Wingate

Should I Carry Full Coverage On My Car?

Whether or not someone should carry full coverage on a vehicle is a common question. This is especially true for people with older vehicles. Deciding whether to carry full coverage, also known as comp & collision, is a personal choice. Since the car is older, it’s most likely paid for; hence, full coverage is not required. In this case, you’ll want to consider your financial situation and realistically what you want from car insurance.

When determining if you should carry full coverage on your car, take into account the insurance value and the premium.

Knowing these two numbers can help you complete a risk and reward scenario, thus telling you if it’s a good investment or not. At a certain point, it’s really not worth carrying full coverage on a vehicle that’s older. However, again, this is completely up to the client and their preferences. 

When Do Insurance Companies Total A Car?

Insurance Companies are required to declare a Total Loss on a vehicle once repair cost reaches a certain percentage of the car’s value.  In the state of North Carolina, that percentage is 75%.

Just because your car has been “totaled” doesn’t mean you can’t repair the car and keep it!  When an insurance company declares a car a total loss, they are saying that the insurance adjuster found that the estimated repairs for the car exceeds the percentage of the total value allowed.  At this point, how much insurance will pay for your car has been calculated and you will be given that amount. 

Once a car has been totaled, you are paid you the value for your car and the company takes ownership of it.  However, it is your right to “purchase” the car back from the insurance carrier and have the repairs done yourself.

Also, keep in mind that as we mentioned above, some states dictate the maximum percentage of damages allowed. In North Carolina, any car that has sustained damages 75% or more of the insurance value is a total loss. So, for example, a car that’s worth $10,000 cannot have more than $7,500 worth of damage. It’s also worth mentioning that sometimes individual adjusters will begin totaling vehicles when they have around 55% damage. In this case, it’s worth making a plea to the adjuster that you’d rather not have the car declared a total loss, and most will see if they can help you.

North Carolina Auto Insurance

In the end, understanding how the valuation process of a vehicle works and what is considered a total loss can help you in the event of an accident. Remember that how much insurance will pay for your car will greatly vary on the age of the vehicle, mileage, and overall condition.

Are you a resident of North Carolina looking for car insurance? Contact us today at ALLCHOICE Insurance and learn how we can help!

Auto Insurance Total Loss & Car Value | FAQ

How Does An Insurance Company Determine The Value Of A Totaled Car?

Insurance Carriers use Software that values vehicles based on the car’s VIN, mileage, and overall condition. The value should be in line with what you could purchase a similar car in your area for.

When Do Insurance Companies Total A Car?

Insurance Companies declare a car to be a Total Loss once the repair cost exceed a certain percentage of the car’s value. In North Carolina, the law requires cars to be total once the repair cost reaches 75% of the total value.

Should I Carry Full Coverage On My Car?

The decision to carry full coverage on a vehicle is a personal decision. When deciding, take into account the Insurance Value on the vehicle as well as the premium cost for that vehicle’s Comprehensive & Collision Coverages.

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