Motor Vehicle Insurance – Payment for Vehicle Loss

A person can be in an accident in which a vehicle is “totaled.” When a vehicle is totaled, an insurance company will pay to replace the vehicle. This often happens when the cost to repair the vehicle is greater than the value of the vehicle. For example, it is not economical for an insurance company to pay $10,000 to repair a car which is worth only $7,000.

In these situations, you need to determine how the insurance company will determine “value.” If your insurance company will be paying the amount due, check if your policy provides for payment based on “actual cash value” or “replacement cost.”

  1. With replacement cost, you determine how much it would cost to replace the same vehicle at the time of loss. Often, you can look at a guidebook, such as the book from NADA (
  2. The “actual cash value” is a different calculation (ACV). ACV considers the depreciation on a vehicle. The normal calculation is –
  • original cash value less depreciation

the depreciation number should be based on the useful life of the vehicle and the number of years in service, i.e. 60% depreciation if car is 3 years old with a 5-year useful life.

there can be an additional deduction for items such as high mileage

In certain cases, you can obtain full replacement cost coverage. Also, if you are buying a car on credit, you may be required to obtain “gap insurance.” which covers the difference between normal insurance coverage and the amount of a loan. Gap insurance between important when a loan is upside loan (the loan amount is greater than the value of the motor vehicle).

If you have any questions in Connecticut concerning insurance coverage issues, please feel free to contact

Attorney Robert M. Singer

2572 Whitney Avenue, Hamden, CT 06518


Serving all of Connecticut

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