Car Accident Property Damage: How the Insurance Company Decides to Fix or Replace a Car

Accidents resulting in property damage, but not personal injury, occur frequently. In such a scenario, understanding how to navigate the insurance claim process independently becomes crucial.

Andrew Kryder, founding partner of The Kryder Law Group, LLC Accident and Injury Lawyers, offers valuable insights on how to manage an auto insurance claim on your own. His comprehensive video series, Car Accident Property Damage: How-to Guide, demystifies the claims process, helping you maximize your settlement amount. His years of experience as a Chicago car accident attorney known for explaining complex processes clearly make him a valuable behind-the-scenes ally.

This segment of the How-to Guide explains how a claims adjuster decides whether your damaged car will be repaired or whether your car is totaled.

How the Claims Adjuster Determines That You Have a Totaled Car

“In our prior video,” Andy begins, “we talked about the job of an insurance company. [It] is to restore you to the same [economic] position you were in before the accident.”

So, the auto insurance company is “going to make a determination as to whether they have to fix your car or replace it. The [car insurance] company is responsible for doing one or the other, whichever is less.”

When Damage to Your Car Exceeds Fair Market Value

“So imagine” he continues, “that your car is worth $10,000. Imagine that the estimate was done, and it’s going to cost $2,000 to repair it. In that particular situation, obviously the repairs are less than the value, they’re going to fix your car.”

“Change that around a little bit, though,” Andy continues, “and imagine that the repairs are $12,000, and your car is still worth 10. There it’s going to cost more to fix your car than what it’s worth.”

“So here, they’re going to rule it a total loss, and give you $10,000 which is the value of your vehicle. Again, restoring your property to its value that it was before the accident.”

When Your Car Can Be Repaired, vs. When It Is Declared a Total Loss

 “So these are the things that the insurance company looks at in determining whether the accident has caused a repairable vehicle or the car is a total loss.”

The insurance company decides to either pay to fix a repairable vehicle or replace a totaled vehicle after an auto accident based on whether the repair costs exceed the vehicle’s pre-accident actual cash value.