How do insurance companies figure the amount to pay you when you total your car?

Yo' Mama

Every state has an insurance commission that sets the rules to which insurance companies are held when it comes to evaluating a car as a total loss. The insurer uses a formula to determine how much they can spend to repair a car: retail value less salvage value = maximum repair cost. If the cost to repair exceeds that amount, it is a total loss. If it's a total loss, the insurer's goal is to value your car objectively and determine what you could reasonably have sold your car for the day before the accident. There are many independent market research companies who conduct research into the sale prices of cars based on make, model, year, equipment, mileage and condition as well as the geographic area in which the vehicles were sold. The insurance company can only use resources that meet the criteria set out by each state. Blue Book is not one of them because that is a source established for lending companies to determine how much money can be loaned on a car. In the absence of viable book pricing, a market survey may be conducted to get dealer input based on the elements described above. The state also determines how the total loss payment is calculated; i.e., whether you receive payment for sales tax on the value of the car you lost. Depending on whether the total loss was a collision loss (hit a car or a fence post or something lying in the roadway--called a "roadbed collision") or a comprehensive loss (hit a deer or it caught fire or got caught in a hail storm), the amount of any deductible comes off the amount payable. Then your lienholder (if you have a car loan) has to be paid from the proceeds of the settlement in order to release the title to the car. A lot of people run into trouble here because they often owe more than their cars are worth due to finance charges and long loan terms. Insurance companies aren't out to screw their customers. They have to follow the insurance laws of their state to the letter or they lose the right to sell insurance in that state.

Bobby Jim

Book value of the car,
less deductions for mileage and overall condition,
less any previous damage (dents, glass cracks, parts missing, tire wear, etc.).
Less the deductable of your policy,
and they give a buck three-eighty for your totaled car.

fade_this_rally

They go by the Blue book value...Go to KBB dot com and you can find that value out for yourself.

oklatom

They will send an adjuster who will look at the car, and they will figure the worth of the vehicle at the time of loss, adjusted for condition. Less for high mileage, more for upgraded stereo, that type of thing. Then they will look at the damage and get some idea of what it will cost to fix it. If the cost of the fix is around 80% or more of the worth of the vehicle, they will total it and give you the value of the vehicle at the time of loss.

dodge man

they will go by the actual amount of what its going to cost to repair it,if its more than 80% of the value of it ,they will total it out,and pay it off if you owe against it,you get out of debt,but have no car,or you have the option of having it replaced with another one like it,that's usually the only two options you have,good luck,i hope this help,s.

babycakes3557

They go by what they call the low blue book value of the car. Even though you may have kept the car in perfect conditon, it still will be only worth a certain amount. Hope I could have helped

sniper

Usually the damage is figured at a percentage of the value of the vehicle. Example: 10,000 dollar car, with 8,000 dollars in damage, would probably be totaled. The amount you receive if it is totaled, is usually the loan value minus your deduction.

CowboyBill

If cost to repair exceeds the value or a set percentage of the value of your car it is considered a total loss. Every state has it's own rules -- some vehicles can be repaired up to 99% of ACV (actual cash value), others are as low as 70%. Your insurance company will most likely use the NADA pricing guide (not Kelly) for a baseline and add or subtract for mileage, options and condition of your car. ACV is what your vehicle would have sold for on the open market prior to the loss, NOT wholesale.

Kelley Blue Book

cynical jade

You pay your deductible. They pay as little as possible and then raise your rates. We lose they win.

oracle

It's considered a "total loss" if the amount it would cost to fix is greater than the book value minus what they'd get for salvage.

You'll get a check for the book value minus what they'll get for salvage for the wreck- to be used for parts.

shakiraalejandra

Well they lool at it and then they go into the computer and they look for all the parts that is damaged and that is how you know that is how insurance companies know.

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