Car Insurance Company Says My Car Is a Total Loss?

Reader question:

I recently totaled my car, and the amount that my car insurance company offered me for my car insurance total loss claim was a less than the amount noted in Blue Book. Can they do that?

Randy

They sure can.

Whenever you total a vehicle, your car insurance company pays you for the total cash value of the vehicle you total. While a good way to get this amount is to look in the Kelley Blue Book, it is anything but fool proof. Consider, for example, that cars experience wear and tear over the years, which brings down the amount that they are worth on the market, as well as in the salvage auction. Another thing that might lower the value you is if the car has been in an accident before and gotten repairs. Chipped paint, a bad transmission, anything will decrease the value of a vehicle, even if Blue Book says it should cost a certain amount.

In the end, the judgment must be made by you and your car insurance company to accept or deny an offered price. If you think that the amount they want to give you is not the correct amount, then you do not have to accept it. You can continue to negotiate with the claims adjuster, and if necessary bring in an attorney to help.

Cheers,

Fashun Guadarrama.

Car Insurance Depreciation And Value of Your Claim

Reader question:

What does car insurance depreciation have to do with the claims process?

Maya

Good question.

Depreciation is something that can put many new car owners into a bad spot if they total their car. The deal is that the second you take your car out of the car dealership, its price drops significantly. In the first couple of years or so that you own the car, its price continues to drop quickly, and then peters out over the remaining years. This is called car insurance depreciation, and it is what determines how much you get paid for a total loss when you make a claim.

Your car insurance company pays you what is called the cash value of the car when it is totaled, and this is the depreciated amount, not the amount you bought the car for. Even for a new car, this amount is often a lot less than it would take for you to finish paying off your car finance loan. This is why it is a good idea toget gap insurance, so that if your car gets totaled you can pay off your loan and get yourself another car as well.

Cheers,

Fashun Guadarrama.