How do insurance companies determine whether a vehicle can be repaired or deemed a total loss?

My brother's insurance company deemed his car a total loss. He has new car replacement coverage and full coverage, and it seems odd that his car couldn't be repaired. The vehicle was bought for $27,000. How do insurance companies decide between fixing and totaling a car?

Answer
Car insurance companies have adjusters who assess vehicles after they are in an accident. If the repair estimate from a shop and what the adjuster reports are more than what the vehicle is worth, insurance companies will deem the vehicle a total loss.
While the vehicle was bought for $27,000, cars depreciate over time. Companies settle on the actual cash value, which includes depreciation, and not the purchase price when determining value.
New car replacement insurance ensures that your brother will be able to replace his vehicle with a comparable make and model, but the value of this new car could still be lower than the cost of repairs for his previous vehicle. “
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Emily Maracle
Answered on May 07, 2021
Emily Maracle is a car insurance specialist living in New York. Originally from the Pacific Northwest, she has a degree in English Literature and a background in customer service. She enjoys cooking, gardening, and living sustainably. In the future, she can't wait to upgrade to a hybrid or electric car.
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