When you experience major damage to an older car, whether it is from a natural disaster, such as Superstorm Sandy, or a car accident, it's easy for your insurance claim to be near or higher than the car's value. But you may not want to push for a total loss to take out a car loan to buy a new car.
The average age of the cars in the U.S. today is 10.8 years and has been steadily climbing according to R. L. Polk & Co., an automotive data company. Most people are not anxious to replace their cars with newer models. As a result, if their cars are in good shape and well-maintained, it makes the cars worth a lot more to their current owners than the actual dollar value of the car itself. After all, if you haven't had a car payment for five years, do you want to start now?
As long as you have full coverage on your car insurance, your auto insurer will pay for the complete repairs on your car, even if the final amount exceeds the car's value. It's up to the insurance company adjuster to calculate the cost of the damage and to decide if it exceeds the car's value, but this happens before the repairs start. So for a car that is a borderline total, you may want to advocate for the repairs.
Even with extensive repairs to the body or to fix mechanical or electrical problems, it's possible to have a car returned to the same condition before the damage. If more issues appear later that are related to the damage, which is often the case with flooded cars, the insurance company will be required to reopen the claim and complete the repairs.
If you own a car with damage close to its value, first calculate the car's value at car-pricing sites -- such as Edmunds.com, Kelley Blue Book and NADAGuides.com -- and print out a copy of each estimate. With this information, if your car insurance company offers you a payout, you can use the highest value to ensure the payout is fair or, if it's lower, make the argument for either a higher payout or your car to be repaired.
Get more news, money-saving tips and expert advice by signing up for a free Bankrate newsletter.