How do insurance companies estimate car damage?

An insurance adjuster is how insurance companies estimate car damage. Car insurance adjusters extensive knowledge of vehicle repair services and costs, and this professional will carefully inspect your vehicle before preparing an estimate. Realize that no matter how an auto insurance company estimates car damage, they will only pay out the limit specified in your policy, which may or may not be enough to cover the entire cost of repairs. Find better coverage at a better price with our free quote comparison tool below.

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Tonya Sisler has a Bachelor’s Degree from the University of South Carolina in Journalism and has worked for 15+ years in management. She has also completed a proofreading certification and is currently a professional writer.

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Brad Larson has been in the insurance industry for more than a dozen years. He started out as a claims adjuster for a national carrier. He has since switched to the agency side of the business. Brad is licensed in all P&C lines.

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Reviewed by Brad Larsen
Licensed Auto Insurance Agent

UPDATED: May 2, 2021

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Things to know...

  • Your auto insurance policy will only pay out benefits up to your coverage limits
  • Your benefits will also be limited by the replacement value of your vehicle
  • If your benefits do not cover the full cost of repairs or a replacement, you will be financially responsible for the difference

When most drivers purchase a car insurance policy, they reasonably expect their coverage to pay for repairs to their vehicle if it is in an accident. If the car is totaled, you may even expect your policy to pay for a replacement vehicle.

However, the terms of your coverage, as well as the estimated cost of your vehicle repairs, will both be taken into account when you file a claim with your insurer.

Some drivers find out that they must pay money out of their own pocket to repair or replace their vehicle after an accident. By learning more about this possibility, you can better determine the right course of action for you to take.

Learn more about auto claims below and make sure to use our free insurance comparison tool above to compare the best rates today!

Filing a Claim With Your Provider


As soon as possible after you are involved in an accident, you should file a claim with your provider. The other party involved in an accident may initiate the claim for you, but you will still need to talk to your provider to submit your own claim.

A claim may be filed over the Internet in some cases, but the most common method drivers use is to call the customer service department at their provider’s office directly.

Filing a claim is not as difficult as it may sound. You simply provide your insurer with information about your policy as well as details about the accident. The insurer may need to review a copy of the police report if law enforcement officials were on the scene. They also may ask to see photos of the damaged vehicles if you took any.

Understanding What Your Coverage Includes

After you file a claim, the insurance company will do some work to determine the amount of benefits you may receive. One of the limiting factors that impact claims benefits is the type of coverage you have. Keep in mind that liability coverage only pays for another party’s expenses if you cause an accident.

If you only have liability coverage, any repairs and other expenses that you incurred will need to be paid directly by you.

In addition to the coverage type that you have, the benefits will also be limited by the coverage amount you purchased. For example, if your coverage includes $10,000 for vehicle repairs to your own car and your expenses are $15,000, you will be required to pay the additional $5,000 out of your own pocket.

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Analyzing Your Claim Benefits

When you contact your provider, you can inquire about the type of coverage you have if you are not already aware of it. However, it is best to review your policy before you are in an accident and to purchase the most protective and inclusive coverage that you can afford.

This will help you to avoid having to pay a significant amount of money from your own funds if you are involved in a car accident or have other types of vehicle damage.

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Estimating the Cost of Vehicle Repairs

The initial estimate for vehicle repairs will be created by an adjuster who works for your insurance company. The adjuster has extensive knowledge of vehicle repair services and costs, and this professional will carefully inspect your vehicle before preparing an estimate.

You typically will get your own repair estimates from several mechanics or service centers. In many cases, the insurance adjuster’s estimate will match the auto service centers’ estimates. If this is the case, you will only need to pay your deductible for your insurance coverage. If the estimates do not match, the adjuster will typically communicate directly with the mechanic to rectify the situation.

Determining Your Car’s Replacement Value


Remember that your benefits when filing a claim are limited by your coverage amounts as well as by your car’s replacement value. When repair costs are very high and approach or pass the replacement value of the vehicle, your car may be classified as being totaled.

This means that the auto insurer will not pay for repairs, and instead, an amount equivalent to the replacement value will be paid out.

These proceeds are usually first given to your auto lender to pay off the existing car loan balance. Any remaining proceeds will be provided to you. If you owe more on the car than the amount of your insurance benefits, you will need to pay the remainder of the loan balance off on your own.

Using GAP Insurance

If you purchased GAP insurance with your auto policy, your GAP insurance will pay the remainder of the loan balance off for you. In some cases, this may be a benefit worth thousands of dollars to you. You typically do not need to file any additional paperwork for your GAP insurance to be activated.

However, if your car is severely damaged and not totaled, your coverage limits may not be enough to pay for the repair work.

Your GAP insurance will not be used in this case. GAP insurance benefits are used when the limiting factor is the vehicle’s value rather than when it is the coverage limit that you selected.

Disputing Your Claim Settlement

Some drivers are not happy with the end result of their claim. If you are in this position, you can request arbitration or contact your state’s insurance department. Hiring an attorney to explore your legal rights is also an option.

Shopping for an Affordable Policy


It is wise to review and update your coverage every six months. This will ensure that you always have the most protective and affordable car insurance in place. You should request quotes from between three and four insurers at least, and this will help you to identify the best deal possible.

Choose coverage types and limits that are most beneficial to you. Insurance needs can change over time, and the coverage that you currently have in place may no longer meet all of your needs.

Pay attention to the insurer’s reputation and financial strength when you are comparing quotes. You may also make adjustments to your deductible and maximize the benefits of discounts in order to obtain the lowest premium possible.

Car accidents and other types of damage are common, and they can create financial stress for you if you are not properly insured. The cost of repairs is only one limiting factor that will determine how much your benefits will be when you file a claim. Now that you have a better understanding of how car insurance works, you can take necessary steps to update your coverage as needed.

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