If the repair estimates for your car after an accident are more than your car is worth, the insurance company will likely “total” your car and pay you its actual cash value rather than pay to fix it. So if your car is totaled out and you are getting a settlement or "buyout" for your vehicle due to the fact that it is not economical to fix the vehicle, then you can expect to get fair market value for the vehicle.

This amount that is paid out for your totaled vehicle is normally termed actual cash value (ACV) and is calculated by the insurance company using such items as Blue Book Value, the National Automobile Dealers Association’s Used Car Guide, local sales of like vehicles to yours in the condition it was in before the accident and their own internal guidelines. This is how insurance companies in Texas as well as other states determine amount your car is worth and thus the settlement amount you would receive.

As the Texas Department of Insurance notes, an insurance company’s offer might not recognize your car’s condition, special features, or value on the local market. Be prepared to negotiate with the company to get what you believe is a fair deal. A company might raise its offer if you can show that your car would sell for a higher price in your area. Get written price quotes for a similar automobile from several used car dealers, or look in the classified section of your local newspaper for used car prices.

Sometimes the insurance company may want to total your car, but you would prefer to have it repaired instead. You can keep your car if you are willing to subtract its salvage value from the insurance settlement. The insurer will tell you the salvage amount they believe the car to be worth and you can always contact local salvage yards for estimates as well.

If you and your insurance company cannot agree on the amount of your settlement, you can demand an appraisal. Appraisal allows you and the company to hire separate damage appraisers. The two appraisers choose a third appraiser to act as an “umpire.” The appraisers review your claim, and the umpire rules on any disagreements. The appraisal decision is binding as to the amount of the loss. If there is a dispute about what is covered, you can pursue a settlement of the coverage issue after the appraisal. You must pay for your appraiser and half of the umpire’s costs.

Appraisal is available only in disputes between you and your insurance company. It is not available if the other driver was at fault and you disagree with his or her company’s offer.

Once you have filed a claim, Texas law sets deadlines for the insurance company to act.

• The company must respond within 15 days after receiving your claim in writing. It will probably ask you to document your loss.
• After you submit any requested documentation, the company has 15 business days to accept or reject your claim.
• Once the company agrees to pay your claim, it must send your check or draft within five business days.
• A company that cannot meet these deadlines must send you a notice explaining why. The company then has 45 days to either approve or reject your claim.

Keep in mind that the TX prompt payment law does not apply if another driver’s insurance company is paying the claim. However, the company is required to act in good faith and to make a prompt and fair settlement.

Your insurance agent or claims adjuster (if you are working with one due to an accident totaling out your vehicle) should be able to tell you more about how ACV is determined and how you will be settled with or reimbursed as you stated. To get low cost car insurance quotes for Texas, click here.