Car insurance is designed to cover the cost of repairing your car if it is stolen, damaged in a collision, or if it is vandalized. If your car is in an accident and the cost to repair it exceeds the vehicle’s value, your insurer will declare it a total loss.
In this circumstance, the insurance company will pay the market value of the car as it would be worth if it were in perfect condition. This amount is determined by a number of factors including the age, make, and model of the car.