If you get in an accident and "total" your car, it's your insurance company's
responsibility to provide you with an amount of money that would purchase an
equivalent car. This doesn't always happen, unfortunately. Most insurers don't
use the Kelley Blue Book or NADA standards to estimate values. They have
their own formulas and will often consider quotes from various dealers that
aren't always that attainable, and this isn't always a good indication of your
specific vehicle's true worth. Every car is different, with things like condition,
mileage, and repairs playing vital roles. If they choose to use one of these
methods, you may want to present them with some local quotes of your own.
It's recommended that you keep a documented vehicle history as well, so you
can present repair and maintenance receipts if there's a dispute. Make sure
the amount you and your insurer settle on includes sales tax for the purchase
of your replacement automobile. This is often left out by insurers, and
replacing your car should not come with additional tax costs. If you have a
classic car make sure you have classic car insurance that provides
replacement value coverage, otherwise you're putting your investment at
risk.
If you get in a wreck and your car is deemed repairable, make sure to ask for
diminished value compensation. Diminished value compensation pays you
for the loss of market value that your vehicle incurs due to the accident and
repairs. Once your car has been wrecked it is worth less, even if completely
repaired to like new condition. Most people don't want to risk purchasing a
car that's been in a major accident, and this substantially hurts your re-sale
value. It's always a good idea to check with the car insurance company to
see if they offer diminished value before purchasing their coverage.
