Book value is the market value of your car according to publicly known standards. If you have an accident, regardless of how much coverage you've got, an insurance company will never pay you more than the book value of your car at the time of the wreck. This is true even if your cost to repair the car is more than the book value. These values of cars are published in guides such as the nada official used car guide and the Kelley Blue Book and include depreciation for wear and tear on the vehicle. All cars depreciate at different rates, but the general rule is that a car depreciates a third in five years. As your car's value decreases, you might want to change your coverage, so you won't be paying more in premiums than you would receive if your car was totalled. Consult an insurance agent in your area for information about your own coverage.
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