Will the Insurance Company Total My Car?

In the aftermath of a serious accident, what happens to your car? If the damage to your vehicle is extensive, the insurance company may determine that you have a totaled car, one that is not worth repairing. Understanding how an insurance company decides if your car is a total loss will give you peace of mind during this very stressful time, and help you to know if you are being treated fairly in the process.

Assessing the Damage

Immediately following the accident, you can look for indications that the damage is severe and the repairs will be costly. You may see leaking fluid, a bent frame. or damage under the hood. If your car won’t start, the doors won’t open, or there are parts of the car blocking the wheels, you will probably be dealing with very expensive repairs. While scratches and dents, damage to head and tail lights, and cracked or shattered windows are usually not as serious, even smaller repairs can add up. It is always a good idea to take pictures of your car, any other vehicles involved, and the crash site, so that the accident and damage are documented in case any questions arise later.

Determining the Loss

Your insurance company may total your car based on whether or not it costs more to repair your car than your car is actually worth. If you have a $10,000 car, and it will cost $12,000 to repair it, the insurance company will total your car. Although this sounds fairly simple, there are factors involved which can make the determination more complicated.

• Actual Cash Value (ACV). Most insurance companies have data tables to determine the ACV of your vehicle. Condition, mileage, options, age, and even the market in your specific area all come into play. Check Kelley Blue Book for a approximation of your car’s worth. If your car is a classic or a high-end vehicle, that also factors into the ACV. Look for comparable cars that are for sale in your area to get an idea of what it would cost to replace your car. These comps can presented to the insurance company as support that your car is worth a different amount than the amount they have calculated.
• Projected Repair Costs. Repair costs must be estimated to determine if your car is a total loss. If the damage is primarily cosmetic rather than mechanical or structural, the cost may be significantly lower. However if there are structural issues, the vehicle is usually better off totaled. Even though it is physically possible to drive a car with a bent frame, it is often a safety risk and may even be against the law in your state.
• Method of Determination. Once the ACV and estimated repairs have been established, the determination is made. Projected repairs do not have to exceed the value of the vehicle, however, for the insurance company to declare it a total loss. Most insurance companies will total a car if repairs exceed 70 percent of the ACV. Using that percentage and the example above, if the damages exceeded $7000 on your $10,000 car, it would be declared totaled.

Older vehicles are totaled more often due to their low resale values. You may have kept your older model car in excellent condition, both mechanically and cosmetically, but repair costs could easily exceed the ACV of the car, resulting in the car being totaled. This may be frustrating, as replacing a well-maintained older vehicle with an equivalent one could be difficult. Always feel free to discuss these issues with your insurance company as you may be able to arrive at a car value that is agreeable to both parties.

• Statutes and Regulations. State statutes or regulations may also set the criteria for deciding when an insurance company can, or should, total a car. Your insurance agent can give more information on this. For instance, your state may have laws regarding the percentile thresholds for totaling a car, requiring that the car is totaled if the damages reach a certain percentage of the car’s value.

Replacing a Totaled Car

In general, totaling a car works out well for the insurance company and the owner. The insurance company comes out ahead because they don’t have to pay for excessive repairs. It can be beneficial for you, because an accident and subsequent repairs can actually lower the value of your car. When your car is totaled, you should receive the actual cash value of your car, minus the deductible on your policy, so that you can begin shopping for a replacement.

Working with a reputable collision center that is on your side is a good idea when dealing with an insurance company, even if the car ends up being totaled. At the very least, it is important to have a good estimate of repair costs. If your car has been in an accident, schedule an appointment today for a no-obligation estimate.