When your insurance company declares your vehicle as a total loss after an accident, it not only means you'll need a new vehicle, but it could also impact how much you pay for your insurance coverage. The applicability of an increase depends on factors such as your previous claims history and whether you were found to be at fault. Each insurer uses its own criteria for determining the amount of a rate increase, and these can vary greatly from one company to the next.
In general, your insurance company will determine your vehicle to be a total loss if the costs associated with repairing the vehicle are greater than when replacing it. You will be compensated based on what the company determines to be the vehicle's actual cash value, which is its current market value at the time of the accident minus depreciation. Each insurance company has its own method of determining the value.
Were You At Fault?
An important factor in determining whether your premium will increase is whether you were found to be at fault for the accident. If you were not at fault, the laws of your state may prevent your insurer from raising your rates or limit the amount of an increase. As a rule of thumb, you can expect an at-fault accident to have a greater impact on your premium than one where you were struck while sitting at a stop sign.
Severity and Frequency
A total loss nearly always means the damage to your vehicle is extensive and your insurer needs to pay thousands of dollars to you. Some auto insurers consider the amount of damage when determining whether to raise your rates, so a total loss can increase your chances of an increase. If this wasn't your first accident, the company may begin to view you as a poor risk and consider canceling your coverage if the laws of your state will allow it. Cancellation will likely mean you need to obtain high-risk coverage, which is much more expensive.
Many auto insurers will forgive a first at-fault accident regardless of how much it paid out. Forgiveness means the company will not assess a surcharge after an initial accident provided you've been insured with the company for the required length of time. You may be surcharged for any subsequent accidents, and the company will still consider the severity of the forgiven accident when assessing you as a risk, meaning it may be more likely to cancel your policy if you continue to have accidents.