Car policy confusing? Ask Poli.
How does my insurer decide my car is totaled and what it is worth?
Most forms pay actual cash value or repair cost, whichever is less — which is why a repairable car gets totaled. Here is the wording that sets the number.
What filed auto forms generally say
Physical-damage coverage usually promises the lesser of the actual cash value of the vehicle or the cost to repair it, minus the deductible.
Because of that “lesser of” language, a car is declared a total loss when repair estimates approach its value, not only when it is destroyed.
Actual cash value generally reflects depreciation. Replacement-cost or new-car-replacement coverage, where purchased, replaces that measure for a limited period or mileage.
Why your policy can still say something else
How actual cash value is determined, whether sales tax and fees are included, and any total-loss threshold set by state law vary by form and jurisdiction.
Clauses to look for in your own document
- Part D — Limit of Liability
- Actual Cash Value
- New Car Replacement endorsement
- Appraisal / Loss Settlement
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PoliSays explains document wording. It is not an insurer, broker, or law firm, and nothing here is advice.