My Car Was Totaled. How Does Insurance Decide What It’s Worth?
When a car is a total loss, people often ask us, “Why is the check lower than I expected?” A recent court case in New Jersey put this question in the news. A driver said her insurance company paid her less than her car was worth. We want you to know how it works before it happens to you.
Most auto policies pay what your car was worth right before the accident. This is called actual cash value (ACV). It is not what you paid for the car, and it is not the price of a new one. Your deductible is also taken out of the payment.
In Indiana, a car is usually a total loss when repairs would cost about 70% of what the car is worth. To find your car’s value, the insurance company looks at similar cars sold or for sale near you. Then it adjusts the price for mileage, features, and condition. If you have a car loan, the money goes to your lender first. If you owe more than the car is worth, you may still owe the difference.
Many people think insurance will pay for a new car or pay off the whole loan. But cars lose value fast, and your policy only pays what your car was worth on the day of the accident. Another common idea is that the first offer is final. It isn’t always. You can ask how the value was calculated and question anything that looks wrong.
If the offer seems low, ask for the valuation report. Check that the mileage and features are correct. Keep your repair records, receipts for new tires, and ads for similar cars near you. They can help show your car is worth more. And if you have a loan or lease, ask your agent about gap coverage before you need it.
At RiverTree, you don’t need to become an insurance expert. You simply need an agent you can trust. We give honest guidance, explain your coverage clearly, and build lasting relationships based on trust and transparency. Every RiverTree blog reflects our core values: trust, honesty, and clarity.