Question: My car was totaled by the insurance company. It’s old and not worth much, but it means a lot to me. It’s too badly damaged to buy back and repair, but can I get money as part of the settlement for the sentimental value of my car?
Answer: No matter how much your beloved vehicle means to you, car insurance companies simply won’t pay out money for a vehicle’s sentimental value when settling a claim.
You may believe your car was much more than a tool for transportation, but your car insurance company is a business that looks at the car as merely an object that is worth a certain amount.
Insurers have a method in place to determine how much your totaled vehicle is worth – its actual cash value (ACV) or fair market value (FMV), as car insurance companies call it. There is no such objective way to put a number on the sentimental value one has for his or her vehicle even if your car insurance provider cared about that, which as a business it does not.
How your car’s value is determined
An insurance company determines the actual cash value of a car based on the current market value of that same vehicle in your area. This value takes into account:
- The pre-accident condition of your vehicle
- The vehicle’s mileage
- The vehicle’s age
- The vehicle’s options
Options like a manufacturer installed navigation system or entertainment center should add value to your car. Personal items like fuzzy dice on the rear-view mirror or “cool” car seat covers will not.
Each car insurance company has its own internal guidelines for determining how much you’ll receive for your totaled vehicle. However, in general, at least one of the following ways will be used:
- Vehicle valuation software
- Valuation guides, such as Kelley Blue Book (KBB), NADA
- Review of sale prices of comparable vehicles in your local area. This may include dealer ads and sales, private sales and online pricing.
ACV is calculated in the same matter whether the car insurance company that is paying for your totaled vehicle is a third-party one that you placed a property damage liability claim with or your own car insurance provider that you placed a collision or comprehensive claim with.
If the claim is a first-party one with your own insurance company, then your deductible amount will be deducted from the amount you’ll receive for your car. If the claim is through the other driver’s insurance, then no deductible is owed.
Insurance after your car is totaled
When you are done with the claim for your total loss vehicle, it will be time to take the car off of your car insurance policy.
If this was the only vehicle on your car insurance policy, and you don’t yet have a replacement for your beloved car, then instead of having a lapse in car insurance coverage think about obtaining a non-owners policy.
A gap in car insurance coverage can drive your rates up, but you can keep coverage continuous with a non-owners policy, which is typically cheap at $200 to $500 a year. This will keep your car insurance rates reasonable when you do have a new car to insure.
When buying a new car it’s the perfect time to compare car insurance quotes with multiple car insurance companies. Make certain your current insurance provider is giving you the best rates. If it’s not, then change to a reliable company that is offering better rates and save.
There are policies that take into account a car's sentimental or collector value, typically known as agreed-value policies. (See "Insuring your keepsake car.") You and your insurer agree ahead of time on how much the car is worth, and you pay a premium based on that amount. But there may be strict conditions on how many miles you can drive it, who can drive it, or how the car is stored.