Am I Covered If My Car Is Totaled in an Accident?

Learn how Replacement Benefits Coverage can protect you from financial loss if your car is totaled. Understand actual cash value vs. replacement value and how to ensure your policy has the right coverage.
May 1, 2025 | Auto
By: Lisa D.
Lisa D. has almost 20 years of experience in the insurance industry, including over 15 years at Acuity. Before starting at Acuity, she obtained her P&C license and sold personal insurance. She keeps a pulse on industry trends while continuing to specialize in developing and updating personal auto insurance products. On top of that, Lisa has her Association in General Insurance (AINS) and Associate in Personal Insurance (API) designations. Outside of work, Lisa enjoys cooking, photography, and spending time with her family. The last two go hand in hand, as she takes pictures of her kids every day.

Author of Auto Focus

Accidents can be stressful enough without the added worry of what happens to your vehicle afterward. If your car is deemed a total loss by your insurance company, you might be wondering how much money you'll get to replace it and if you’re getting the full value of your vehicle. To help clear up the confusion, let's break down the process and the types of coverage you need to make sure you're properly protected.
 

What does "total loss" mean?

When your insurance company determines your car is a "total loss," it means that the cost to repair your vehicle exceeds its actual cash value (ACV). The ACV is essentially the current market value of your car, factoring in depreciation.

For example, suppose your vehicle is worth $10,000, but the repair costs after the accident amount to $12,000. In that case, the insurance company may declare it a total loss and pay you the ACV—often significantly less than the price you paid for the car.

 

What Type Of Insurance Do I Need To Cover A Constructive Total Loss?

If you want constructive total loss coverage, your auto insurance policy must include comprehensive and collision coverage. These coverages protect your vehicle in the event of accidents, theft, vandalism, or natural disasters. However, standard policies usually only cover the vehicle's actual cash value (ACV), which can leave you feeling under-compensated.

 

What Is Replacement Benefits Coverage?

Acuity offers Replacement Benefits Coverage as an optional endorsement to ensure a better claims payment experience after a total loss. If your vehicle is under five years old at the time of loss, this coverage will pay for a brand-new replacement vehicle of the same make and model.

Suppose your vehicle is over five years old when destroyed in a total loss. In that case, this endorsement pays you 25% more than ACV, providing additional flexibility when selecting a replacement vehicle. 


How Do I Know If I Have This Coverage?

To ensure your policy includes Replacement Benefits Coverage or similar endorsements, check the declarations page of your insurance policy. This page outlines the details of your coverage, including any special endorsements like Replacement Benefits. If you're unsure or need to make adjustments, contact your insurance agent.

 

Why Replacement Coverage Matters

If your car is totaled in an accident, the financial outcome largely depends on your coverage type. Adding coverage like Replacement Benefits Coverage can give you peace of mind by helping you replace your vehicle with a brand-new one. Be sure to review your policy regularly, and don’t hesitate to ask your agent about the right endorsements for your needs.

By: Lisa D.
Lisa D. has almost 20 years of experience in the insurance industry, including over 15 years at Acuity. Before starting at Acuity, she obtained her P&C license and sold personal insurance. She keeps a pulse on industry trends while continuing to specialize in developing and updating personal auto insurance products. On top of that, Lisa has her Association in General Insurance (AINS) and Associate in Personal Insurance (API) designations. Outside of work, Lisa enjoys cooking, photography, and spending time with her family. The last two go hand in hand, as she takes pictures of her kids every day.

Author of Auto Focus