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UPDATED: Oct 8, 2018
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- Figuring out what the total loss threshold is
- Determining the cash value of your vehicle
- Deciding if GAP coverage can help
Calculating the total insurance loss for your car insurance is mainly based on an average car comparison, but there are varying factors that can impact the final result.
It is in your best interest to keep all of your maintenance records to help prove the condition of your vehicle.
Total loss can be quite devastating with a vehicle because of depreciation, which is especially true if you still owe money on the car.
Providing as much information as you can to your insurance claim inspector can help you get fair value for your car.
Read on to learn all of the details on how to calculate total loss for auto insurance purposes and then be sure to enter your zip code in above for free car insurance quotes!
#1 Determine the Total Loss Threshold
Total insurance loss for a car is not necessarily what you may expect from the words “total loss.”
Although a car that is considered a total loss has usually been in an accident, it does not necessarily mean that the car is beyond repair or permanently deemed unsafe to drive regardless of repair.
Total loss is not decided by a safety inspector but by insurance claim inspectors who declare a car a total loss if the value of the repairs exceeds the cash value of the car.
Some insurance companies may differ on the percentage to consider for a total loss, but typically if a car’s repairs will cost 75 percent or more of the car’s value the insurance company will declare it a total loss.
To figure out what the total loss threshold is for your insurance company, you will have to contact them.
Insurance is solely about financial protection, so when it comes to determining if a car is a total loss or not the insurance company will ultimately let the money make the final decision.
To calculate a total insurance loss for your car insurance, determine the cash value by using the various methods below.
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#2 Determine the Cash Value
Every car has a different cash value, although there are a few factors that are weighed heavily in determining the cash value of your car. The basics are consideration of:
- Year of the car
This is very similar to determining the selling value of your car using Kelly Blue Book to decide on the trade-in value versus the street value.
|Maintenance Records||Having maintenance records may help prove your car’s mechanical condition as well as display any aftermarket value that may have been added to the car.|
|Condition of Car Body||While “fair, good, and excellent” are subjective words, it is important to try to label your car correctly. Recent pre-accident pictures of the car can sometimes be helpful in proving body condition.|
|Mileage||Mileage is easy to prove since it will be on the odometer, and that is the next thing that will be added to the appraisal. The lower the mileage, the higher cash value your car may have, so it’s very helpful to know this number. If you cannot access your odometer to prove the mileage, it is possible that you have an odometer reading on the invoice from your last oil change.|
|Trim Package||The type of trim your vehicle has and any amenities can be part of the deliberation.|
To zero in on an even closer appraisal value for your car, call dealers in the area and find out for how much a car similar to yours is currently selling.
You can get dealer prices from the internet or ask for a quote in writing from a dealer directly. Having a written quote may help your insurance claim inspector as he prepares the appraisal.
If you do not feel the adjuster is giving you a fair assessment, ask if an unaffiliated auto body shop can provide a second estimate. Most insurance companies work with auto body shops and have an affiliation that may not be in your best interest.
Your insurance company ultimately works for you to protect your financial assets, so if you are not comfortable with what you are being told, ask questions.
In the case of a total loss, some people may be happy with the payout from the insurance company.
However, if the vehicle is new and still being financed, chances are the total loss payout will not be enough to cover the balance remaining on the loan agreement.
The only true protection for this is to have a GAP policy that covers the financial gap of a total loss.
#3 Determine if a GAP Policy Is Applicable
Vehicles depreciate rapidly, sometimes losing as much as 25 percent of its value as soon as they are driven off of the dealer’s lot.
If a vehicle is financed, then you are most likely making monthly payments that are primarily paying off interest and only a little principal.
If your car is totaled in an accident while you are in this situation then chances are the cash value of your car will not be enough to pay off the loan in full.
This means that you are still obligated to make car payments for a car that will no longer be in your possession.
You can take a chance on not having total loss coverage or you can purchase GAP insurance for a fairly hefty price.
GAP (Guaranteed Auto Protection) helps pay for the difference between the actual cash value and the amount still due on the loan in the event a car is considered to be a total loss.
GAP is expensive, but it is usually considered a good idea for a car that is going to be leased or financed.
GAP can be purchased from some insurance agents and also through dealer financing. Since it is an expensive investment, shopping around for a good rate can be beneficial.
To request quotes for car insurance, enter your zip code and start getting free rate comparisons now.
While there is some subjectivity in calculating a total insurance loss for car insurance, the majority of the determining factors arise from computations derived from average comparisons.
The insurance claims inspector has no personal attachment to your car, but since you do, you may feel it is being undervalued.
Emotions removed, if it truly is not being appraised correctly, do some research and present documents to your insurance company to substantiate your claim.
It can be financially painful to suffer a total loss, but if you have GAP it can help ease the burden should your car ever become involved in an accident of this nature.
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