Reader question:

How much money do yo get whenever your car is totaled and you submit a claim for a car insurance settlement?

Annie

Excellent question, Annie.

What you get for the car that you get the car insurance settlement for is called the actual cash value. This means what the car is worth at the time it was totaled, after you account for depreciation and so on. In some cases, you have a car on which you owe more money than you would receive from the settlement, perhaps because it is relatively new and is still in that stage where it is depreciating very rapidly. Called an upside down car loan, this can be easily solved by thinking ahead and getting gap insurance coverage for your car.

Cheers,

Fashun Guadarrama.