When your vehicle is involved in an auto accident, your insurance company pays you for the car value. To be precise, it pays you for what it asserts to be the value. You can place this cash towards the sum you still owe on the totaled car, or even use it in purchasing a new car. Most people who have been through this process can confirm that the most frustrating bit is accepting the insurer’s assessment of your car value. Almost always, the estimate is tabled considerably lower than you expected, and the money you are given is not enough to procure the same model with same specs replacement. For most car owners, it is not even enough to cover the balance they still owe on the car.For along time insurance companies have been secretive on the methodology they use to value cars, this makes it hard for their clients to challenge the low offers from the insurance company. When you report a car accident to your insurer, they will sends their claims adjuster to interviewing the you and the witnesses, consult police if necessary and inspect the car damages so as to determine the extent of the company's liability.
The claim adjuster’s first order of business is to find out whether the car is classified as totaled. Mostly, insurance companies consider a car totaled if the repair costs exceed a predetermined percentage e.g. 60% - 70% of the car value.
Assuming it’s totaled; the claims adjuster will appraise the car and determine its value. What he is trying to find out is the value of the car would have been just before the accident. Afterwards, the insurance company will hire a 3rd party appraiser to asses and determine his own estimate of car value. The company will then consider both appraisals in determining their final offer to the client.