How Does Auto Insurance in Texas Determine Your Car's Value?


Not everyone pays the same rate for car insurance. Some of the price variation has to do with age, driving history, and where the car is parked overnight. Another big factor, and the one we’re going to discuss in further detail today, is the value of your car. The price you pay for auto insurance in Texas is dependent on how much your car is worth.

The reason why is fairly simple. Your insurance company must pay to repair or even completely replace your car after a covered event or accident. It’s going to cost them significantly more to replace the bumper on a Rolls-Royce than a cheap subcompact. This example is obvious, but what about all of the cars in between these two extreme examples? How does auto insurance in Texas determine your vehicle’s value in order to tell you what to pay?

Understanding Your Car’s Value

When your vehicle is totaled in a major accident, your insurance carrier pays you for the value of the totaled car. But, who tells them what the car is actually worth? A car insurance payout is determined by the value of the vehicle you were driving before the accident that wrecked it.

When you report a car accident to your insurance company, the company sends an adjuster to assess the damage. The adjuster’s first order of business is deciding whether to classify the vehicle as “totaled.” Your car may be considered totaled even if it can be fixed. Generally speaking, the insurance carrier decides to total a car if the cost to repair it exceeds a certain percentage of its value, anywhere from 51% to 80%. 

If the vehicle is totaled, the adjuster then conducts an appraisal. He or she assigns a value to the vehicle, not considering the damage to the vehicle in the appraisal. They are estimating what a reasonable cash offer for the vehicle would have been immediately before the accident took place.

Next, a third-party appraiser issues its own estimate on the vehicle. This is done to minimize any appearance of impropriety or unfair offers. By doing so, your car is subject to a different valuation methodology. 

It’s important to note that a standard insurance policy does not pay you the cost of an equivalent new model, nor does it guarantee a payment equal to the amount you may still owe on the car. If your car loan and interest rate mean you owe more than what the car is worth, you may find yourself in a hole. A new car takes a big hit in depreciation. Replacement insurance and gap insurance can eliminate this risk.

Auto Insurance in Texas Through Pronto Insurance

Car insurance isn’t a luxury; it’s a necessity! Not only is it needed to protect your financial investment, it’s also a legal requirement to drive in the state of Texas. For this reason, it’s worth taking very seriously.

There are many types of policies. As your shop for auto insurance in Texas, be sure to find the one that is just right for you. This means the coverage you need, for a price you can afford. When you get your coverage through Pronto Insurance, this is possible to achieve! 

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