How To Estimate Your Totaled Car Insurance Payout

A while ago I wrote a post on how accidents affect car insurance rates. This led me to further think and revisit one of the aftereffects of a car accident. How to determine the totaled car value. Keep in mind that if your car insurance company declares your vehicle as a total loss, they will always try to pay you as low as possible because it’s their duty. After all, they are running a business. Having said that, there are ways to determine the salvage value of your car. In this article, we will try to examine how to estimate your totaled car insurance payout.


How To Determine The Salvage Value Of Your Car


Two aspects which drastically impact the value of your totaled car are:

1)      What is the extent of damage on your car involved in an accident, and

2)      The mathematical formula which your insurance company utilizes to draw on the totaled car value. They do this by using a salvaged value calculator

Note: Now the term “totaled” is often related to the extent of damage done to your car but from an insurance point of view, you insurer is mainly interested in understanding the cost of repairs to which will bring the car on road again. The insurance company is not interested in knowing what the overall damage is. Reason being, if the cost of repairs exceeds the worth of the car determined by the insurance company, then the car is termed as a total loss (totaled) and the owner is paid the value of the car minus the deductible. Auto insurance companies use their own records to determine the value of your totaled car. Once done, they will offer you an amount which they think is the right value. This amount basically is to purchase a car of the same value and make. In insurance terms this is referred as “Making Whole”.  It is now up to you to carry out your due diligence to understand whether the offer made by the insurer is fair or not. Read further.

Mentioned below are the steps involved in calculating the insurance payout of totaled car:


  • Now, since we understand what impacts the salvage value of the car, we should determine what is the retail value or trade in value of your car. To do this, you can use tools like the Kelly Blue Book or NADA Official User Car Guide
  • Once you have followed step one, you go back to your car insurance provider and ask them the percentage rate which they use against the market value which they have used for salvaged value calculation.
  • Now you have two things with you. The market value of your car which you have obtained in step one and the percentage rate from your insurance company. Suppose the market value of your car is $10,000 and the percentage rate used by your insurance company is 75% then the salvaged value can be calculated by multiplying both these terms. This will come out to be $7,500. Now compare what is being offered to you and what have you calculated. If the difference is quite large then mentioned below are tips which will further help you to minimize any loss.
  • You can always contact an independent car appraiser to get the true value of your car. You can also contact some junk or wrecking yards to get their opinion. They will give you an estimate of how much will they pay you for the totaled car. This will further help you to determine the actual worth.

In a scenario where you decide to keep the totaled car with you, the payout from the insurance company will be drastically reduced. The reduced amount is equal to the deductible plus any profits made from the salvaged process. Another drawback of keeping a totaled car with you is that previously totaled vehicles could only be reinsured for minimum liability coverage only. So, I hope you have a better understanding of how the totaled car insurance payout is calculated.

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