Insurance companies pay out the actual cash value of a totaled car, minus the policyholder’s collision or comprehensive deductible. The actual cash value (ACV) is what the car was worth immediately prior to being totaled, and it’s calculated based on factors such as age, make, model, and accident history.
Because a car’s ACV is affected by depreciation, your totaled car insurance settlement may be significantly less than what you initially paid for the car or the cost of purchasing a similar replacement vehicle. But if you’ve purchased new car replacement insurance, you’ll be reimbursed for the value of a new car that’s the same year, make, and model as the one that was totaled.
If you’re concerned that your totaled car insurance payout is too low, you can send your insurer a counteroffer with evidence supporting why you think your vehicle is worth more. This evidence can include independent appraisals, receipts for features that you’ve added, and prices of comparable vehicles in the area.
To learn more, check out WalletHub’s guide to totaled cars.
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