How Does Your Auto Insurance Determine the Value of a Totaled Car? 

When your car is declared a total loss after an accident, your auto insurance company must determine its actual cash value (ACV) to calculate your payout. This process involves several key factors that determine a fair and accurate valuation.

How the Value of a Totaled Car Is Decided

First, insurers assess the condition of your vehicle before the accident. This includes the car’s age, mileage, make, model, and overall wear and tear. A well-maintained car with low mileage will typically be valued higher than one with extensive use or damage.

Next, insurers typically use market comparison tools to evaluate the going rate for similar vehicles in your area. They look at local listings, dealership prices and recent sales of comparable cars. This can help establish a baseline market value.

Adjustments are then made for optional features or upgrades, such as leather seats, premium sound systems or advanced safety technology. Conversely, deductions may apply for prior damage or mechanical issues.

Insurance companies also factor in depreciation, which reflects how much value your car has lost over time. Even if your car was in excellent condition, depreciation can significantly reduce its ACV.

Once the ACV is determined, your insurer subtracts your deductible—the amount you agreed to pay out of pocket—before issuing your final payout.

Learn More

Understanding how insurers calculate the value of a totaled car can help you better navigate the claims process and advocate for a fair settlement. For more information about auto insurance, contact Family Affordable Insurance.

This blog is intended for informational and educational use only. It is not exhaustive and should not be construed as legal advice. Please contact your insurance professional for further information.