When a car accident happens, there are two ways an insurance company can go when it comes to your damaged vehicle. To determine which they will choose, they will assess the damage to your vehicle and weigh the cash value of the car versus the repair costs. After this determination, they will either pay to have your car repaired, or declare it a total loss.
A car is declared a total loss when the cost to return the vehicle to pre-accident condition would be as much or more than the actual cash value of the car. If the repair costs are much less than this, the insurance company will pay to have the car repaired. Here are a couple of examples to illustrate this.
If your car’s actual cash value is $12,000 before the accident, and the repair cost is $3,000, the insurance company would pay to have it repaired, because the repair cost is much less than the cash value of the car.
If your car’s actual cash value is $6,000 before the accident, and the repair cost is $7,000, then the insurance company would declare this a total loss, because the cost to fix it is more than the car is worth. In this case, the insurance company will make a payment to you for the actual cash value of the car. After this, the insurance company will usually sell your damaged vehicle to a licensed salvage dealer (the insurance company becomes the owner of the vehicle as part of the settlement with you).
For more information on California auto insurance, please visit www.aisinsurance.com or call one of our representatives today at 888-772-4247.
This content is offered for educational purposes only and does not represent contractual agreements. The definitions, terms and coverages in a given policy may be different than those suggested here and such policy will be governed by the language contained therein. No warranty or appropriateness for a specific purpose is expressed or implied.
