A total car loss is what happens when the insurance carrier determines it costs more to repair the damage than to fix your vehicle. It’s not necessarily because of a serious accident; your car may be totaled because of a natural event, for example. Partner P.J. Miller spoke with NextAdvisor about what to do when your car is totaled and what to expect when dealing with your insurance agent.

When the Insurance Company Determines Your Car Is a Total Loss

“When the estimate reaches about 70% to 80% of the value of the vehicle, most likely it will be considered a total loss,” said P.J.

How Much Is a Totaled Car Insurance Payout?

Once the adjuster determines whether a car is totaled, the work begins to determine the payout. The payout is based on the fair market value, or Actual Cash Value (ACV).

ACV is simply a term for what was once called the “book value” of the car, P.J. explained — or the value of your vehicle when accounting for the depreciation that all cars begin sustaining as soon as they leave the lot.

If you have New Car Replacement Coverage with your auto insurance policy, you may think you’re 100% covered. But “your car can’t be older than one or two years to qualify for that replacement,” P.J. warned, which further complicates how much money you receive for an insurance payout.

What Happens if You Owe More on Your Loan or Lease Than Insurance Pays Out?

“If you haven’t made payments, or are upside down or late, now there is a gap [between] what you owe and what you’re getting paid,” P.J. said. You are responsible for the shortfall, but if you have gap insurance with your auto policy, this is where it kicks in.

Click here to continue reading the full article and learn practical steps to help you stay focused on getting back on the road safely, and perhaps with a new vehicle.

Questions about car insurance coverage? Contact Wallace & Turner at (937) 324-8492 in Springfield, (937) 652-8492 in Urbana, or info@wtins.com.