“Total Loss” Declaration Value

According to insurers, they use three mechanisms to determine your car’s value after it’s been totaled. These three ways are: computerized vendor quotes, value books (like Kelley Blue Book), and market search of the local area.

However, when searching the local market, insurers might not be able to find a replacement car, and they might reach outside of your living area, and the valuation can be affected.

If you’re living in Philadelphia, the cost of replacing your car is going to be higher in the city than in the suburbs. Insurers say their goal in totaling a vehicle is to allow the individual to purchase their same model vehicle within their market. However, insurers admit that they can use one, two, or all three mechanisms to determine your lost car’s value, which means you never really know what value you will be receiving.

You Might Have to Pay for Sales Tax and Registration Fees

There are 29 states that require the insurer to pay for the sales tax when you replace your totaled vehicle. Make the request to your insurer, don’t expect them to offer to pay it up front.

Even in states that do not require sales tax reimbursement, you should request it. You may not receive it, but many will not deny the request because the policy requires that they make you “whole,” meaning you should recover all costs for returning to where you were before the accident.

Making a Claim Could Increase Your Rates

Many insurance companies follow the industry standard of increasing your premium by 40 percent of their base rate after your first at-fault accident, which can be drastic. This isn’t standard across all insurance companies, but regardless of what formula they use, most of the time, your rates will go up.