After you get in an accident, the insurance company may tell you that your car is a total loss. Lets talk about what that means and how to figure out what your car is worth.
First, a total loss means that the cost of repairing the car is more than the car is worth. Different insurance companies use different standards, but the general rule is that the car is a total loss if the cost of repairs is 75% or more of the value of the car. Example: Your car is worth $10,000. The cost of repairs is $8,000. The insurance company will tell you that your car is a total loss.
Second, how do you figure out what the car is worth? In most states, including California, the insurance company has to figure out the value of the car by determining the “fair market value.” The fair market value is simple: what is the car selling for in your area. The insurance companies will give you a report from CCC or ADP, two companies in the business of figuring out what cars are worth. You can do your own report by using Cars.com or your local newspaper. If the insurance company sends you a CCC or ADP report, review it VERY carefully.
Finally, what do you do if you disagree? If you disagree with your insurance company, you should invoke the “appraisal clause” of your policy. If you disagree with the other partys insurance company, you will probably be forced to sue for the fair market value of your car.