What is “totaling,” and why is it bad?
If you look at your auto insurance contract, you’ll notice a provision that if your car is damaged in an accident, your insurer doesn’t have to pay you more than your auto is worth. If it would cost more to fix the car than a certain percentage of the car’s value, your insurer will consider your car a total loss, i.e., “total” it. All you’ll be able to get is a check for the value of the car. This is bad, because it usually won’t be enough to replace your car, and it won’t be enough to fix it. Plus, if you get back your car and use the money to fix it, insurers may refuse to provide more than basic liability coverage on it.

How do insurers decide what a car is worth?
Insurers keep proprietary databases on car prices, similar to the Blue Book or the National Auto Dealers Association (NADA) Official Used Car Guide. The insurer’s valuation of your car is mostly based on its age. So, your car might be totaled if it’s thirteen years old and receives only minor damage, and it might not be if it’s a brand new Porsche that has been in a devastating collision.

What can I do if I disagree with the insurer’s valuation?
Valuation problems arise in two ways. The most common problem is that the insurer’s valuation isn’t anywhere near enough to actually buy an equivalent car in the marketplace. For example, if a driver’s six-year-old Mazda Protege is totaled, the driver will understandably want enough money to buy another six-year-old Mazda Protege with comparable options. The less common scenario is where an older, more valuable car has been babied so that it is in mint condition and has only a small fraction of the expected mileage on the odometer. Such a car will be worth much more than the run-of-the-mill cars of its age on the road.

If you don’t agree with an insurer’s estimate of your car’s cash value, your best bet is to pay an independent appraiser to provide an estimate. You may need to bring in more than one, so the car will have to be fairly valuable to make this process worthwhile.