You might think that carrying insurance on your automobile means that your insurance company will pay the total cost of your car in the event of an accident. That might not be the case, however, especially if your vehicle is totaled in the accident. Knowing what to expect fromthe claims process means you can negotiate a better settlement for your vehicle.
Collision Coverage
Your insurance company will only pay for damages to your car if you carry collision coverage on the vehicle. This is an optional coverage, you must ask about it when you shop for auto insurance. If you are in an accident with another driver and the accident is that driver’s fault, his or her insurance company is responsible for fixing your car or for paying the fair market value of the vehicle if the car is totaled.
Determing fair market value
Regardless of which insurance company is responsible for paying the damages to your car, the amount they pay is limited to the actual fair market value of the vehicle. Automobile insurance companies use a variety of resources to acsertain the actual value of your car, including widely respected price guides like kelley blue book. You can get an idea of what your car is worth by picking up a copy of the kelly blue book or checking the value online.
The Impact of Depreciation
Your car begins to depreciate the moment you drive it off the dealer’s lot. Thge car continues to depreciate every day you use it, so the amount you get from an insurance settlement for a total loss might not be anywhere near what makes an offer that you feel is less than your car is worth, you can challegne that decision and hold out for a larger settlement. It helps if you have transportation in the meantime because it gives you time to negotiate with the insurance carrier.
Contition Counts
The fair market value for a car in excellent condition is obviously much higher than the value of a car in poor condition, even when those vehicles are the same make, model and year. The more documentation you can provide to prove the condition of your car, the better off you will be. If you have service records from your vehicle proving that it was cared for properly, that can boost the value of the car in the eyes of the insurance company. Pitures of the vehicle before the crash can help as well.
The mileage on you vehicle aslo helps to determine its fair market value. The more miles you vehicle had on it before it was totaled, the less you can expect to get from the insurance company.
Understanding how each of the above factors impacts the amount you will get for your car is essential, and that information should play a major role when you stop for car insurance. If the value of your car is low, it might nto make sense to sink hundreds of dollars into collision coverage year after year. Knowing how the car insurance company values your car can make it a lot easier to determine the optimal level of coverage for you vehicle.