Getting involved in a car accident usually results in either loss of your car, loss of property in your car, and loss due to property you destroyed like a nearby building or someone’s car. You also suffer losses to either repair your car or repairs needed for the other person’s car you damaged.
So, you basically suffer losses in any car crash. If you have been involved in a car crash and you have a car insurance policy covering the event that led to the loss, your company will step in to cover your losses.
Your car, or car belonging to the third party will either be repaired or replaced if the car is declared a total loss (totaled).
After a car accident, If the cost to repair your car is much more than the current market value of the same car, your car will be declared a total loss and thus will be totaled. A totaled car just implies your car is damaged beyond repair, or it means that replacing your car is cheaper than repairing it.
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what does totaled car mean?
Assume your Subaru Forester’s current Market value is $10000. Assume the cost of repairing your Subaru Forester after a car wreck is approximated at $8000 or $15000, then your car will be declared a total loss. In many states, a car is totaled once the cost of repairing it exceeds 70 or 75% of its current market value.
How do adjusters determine if a car is totaled?
After a car wreck, your insurance company will send their claims adjuster to check the extent of the damage, investigate the at-fault driver, estimate the cost of repairs and finally determine the actual cash value of your car. Costs of car repair estimates are compared to the current market value of your car and if the actual cash value (current market value) is less than the cost of repairs, your car will be declared a total loss.
Reasons why a car is totaled
- If your damage is beyond repair.
- If the cost to repair it exceeds the replacement car price.
- If you request the company to total your car.
- Damage may not be so serious but the company wants to escape additional claims.
- If your car is too old or with big mileage.
- If the car cannot be safely repaired. For instance, the frame is significantly damaged.
Car totaled but still drivable.
If your car is totaled but you still feel that attachment, you will negotiate with your company and retain it, though this depends on the company and state or country you live in. Some states won’t accept this.
The company will deduct salvage value (car wreck value) from the actual cash value and pay the balance. For instance, if the actual cash value of your totaled car is $4000 and the salvage value of the car wreck (scraps) is $500. You will get back your car plus $3500 which is the difference between $4000 and $500.
Your damaged car will receive a salvage title and the following repercussions.
- Your car insurance will not be responsible for the repairs, so you need to repair it using your own money.
- It won’t be registered not until it has passed inspection.
- The salvage title remains permanently on your so you will struggle to get insurance coverage again, though few companies cover such cars.
- You will not fetch enough money in case you need to resell it.
How long does it take for insurance to check totaled car?
This depends on so many factors like the customer care of your company, company robustness, how fast you submitted your claim, how severe was the accident, how busier the claim adjusters are, and if you are at fault or not etc. But in reality, any car accident claim takes 1-4 weeks for the payout unless there are lawsuits involved.
Most car insurance wants to pay you quickly in anticipation of hidden claims or may decide to delay claim payout to make you desperate for any amount they decided. It will always be wise to let your insurance company negotiate with your lawyer even if you do not intend to file a lawsuit against them.
From my experience, all claim adjusters have a couple of lawyers behind the scenes who offer them legal and negotiating tactics, so you won’t manage squeezing good bucks from someone who is much more experienced in their field of profession, backed up by such smart lawyers or advisors.
Car total loss formula
If you decided to sell your car just before the accident, what you receive is called the fair market value of that car. Fair market value and actual cash value are 2 terms used by many companies to refer to the same thing though there are slight differences.
The final payout from your totaled car will depend on the year, mileage, make, and model of your car. Payment will also be affected by previous car improvements or repairs, average tear and wear, and the general physical condition of your car.
Assume the current market value of your car is $5000. This value will further be brought down by high mileage, car age, average tear and wear, poor interior outlook, and other parameters already mentioned.
On the other hand, if the market value of your car is $5000, this can be increased to a higher figure if you recently had car improvement repairs, installed gadgets, and your car was in excellent condition. So might want to tell your company about any improvement you recently had on your car by showing them evidence if possible.
The simple Car total loss formula = Fair Market value +- depreciation & car improvements.
what happens to licence plates when a car is totaled?
Either you the insured or your insurance company could retain the totaled vehicle depending on what agreements you make.
- If the company takes over your totaled car, you the owner of the car retain the licence plate and you are free to use it to register a similar car.
- If you the insured retains the vehicle, you may decide to use it on a new similar vehicle or you will be required to return it to the country tag offices for cancellation.
- Should you decide to retain your totaled car, the current licence plates will not be used on the same totaled vehicle even after a successful repair. Your repaired totaled vehicle will need to pass inspection and be issued a ‘rebuilt title’. You will acquire different special licence plates once your car with the rebuilt title has been registered, so you may not need the licence plates anymore.
What happens when your car is totaled and you still owe money?
It is not uncommon to have your car totaled yet you still owe money on the financed or leased car. The insurance company only pays the actual cash value or fair market value of your car after the car accident. Say you still owe $20000 on your car loan, and the actual cash value of the car was $15000 just before the accident. Your insurance company will cut a $15000 check to go to your financing company and you the insured will clear the remaining $5000 from your own pockets.
Say you owe $10000 on your car loan and your car cash value is totaled at $20000. Your insurance company pays $10000 against your loan and pays the remaining $10000 balance to you. Here you go home smiling!
what is car gap insurance?
If your car is totalled but you still owed more money than the actual cash value, you will have no option but pay out the remaining amount from your pockets. Assume your car loan is worth $25000 and your totaled car fetches $15000 as its fair market value. $15000 will be paid straight to clear part of your loan and you will top it up with $10000 from your savings. If you purchased gap car insurance, you won’t need to pay $10000 from your pocket. Gap car insurance will cover it for you. The same logic applies if leased your car.
how long does it take to total a car?
There is no designated time since this depends on so many factors like how robust your company is, customer care, the type of car accident you had and many others. Car accident adjusters easily determine if your car accident resulted in a total loss or not just in one day.
Depending on whether you accepted their decision or not, you should receive a payout check in 1-4 weeks after the total agreement between you and the company. The adjuster needs to look at your car, get estimates of repair costs, and obtain the actual cash value of your car from websites like Kelly Blue Books or Edmunds, take into account the general condition of your car and boom! A certain software helps him come up with a fair decision.
how much damage to total a car?
If your car is damaged beyond repair if it cannot be safely repaired, and if the total costs to repair exceed the actual cash value, most likely your car will be totaled. In some states, your car could be totaled if the computed repair costs exceed 70-80% of fair market value or actual cash value.
Every company has its formulas and takes into different considerations when computing the actual cash value(ACV) of the totaled car. I recommend you inquire from your company or agent and understand all the factors that will be factored into the computation of ACV.
Is my car totaled if the airbags deployed
Deployed Air bags do not automatically make your car a total loss. The cost of repairs against the actual cash value, or fair market value are the major determinants for a car to be totaled. Deployed airbags cannot be repaired. You need to replace them and this will cost you from $1000 to $2000 for some vehicles. Adding this value to total repair costs can easily make it exceed actual cash value leading to a total loss. Yes, just like other repairs, deployed airbags could be a contributing factor too.
Is my car totaled if the frame is bent?
Frame damage does not guarantee that your vehicle is a total loss. But, one of the reasons a car could be totaled is if your car cannot be safely repaired. Car Mechanics or technicians will tell you it’s unfortunate if your car frame is damaged. In 80-90% of cases, your car is gonna be totaled if the technician determines it is not safe anymore even after repairs. I guess this also depends on the extent of damages.
Brand new car totaled not at fault.
Getting a car totaled does not depend on if you were at fault on not. But, certain insurance companies may penalize you while calculating your actual cash value if you are at fault in a car accident. If your car had little mileage or was still new before the accident, your actual cash value will be high and you could get a fat check. The risk of getting your car totaled is higher if the car you were driving is old. For new cars, the adjuster will subtract mileage from the car’s purchase price leaving you a good amount of money and this is not true for old cars.
How do I keep a totaled car?
Yes, you can keep your totaled car after a car crash. But, some states do not allow this so be sure to make good research. If you want to keep your totaled car, simply review laws in your state and if they permit, discuss it with your insurance company. If you decide to retain your totaled car, your car insurance company will pay you Actual cash value less by salvage value.
There are websites and other dealers that directly deal with salvage cars. You can easily get approximate salvage car value from dealers that specialize in that area.
Your car insurance will not be responsible for repairing the totaled car if you decide to retain it, you will not be allowed to drive that car not until it is fully repaired and passed car inspection. You will be issued a salvage car title.
What if I Don’t Agree That My Car Is a Total Loss?
If your car is totaled, you can choose the following options.
- Accept the decision and receive the Actual cash value (Fair market value). This is the price of your vehicle before the accident.
- You can decide to go against this decision and do the following.
You can decide to repair the car using your own money. If you repair a totaled car, you will receive the fair market value less by salvage value. Your car attains a salvage title.
You could decide to file a lawsuit challenging the decisions of the car insurance. But make sure you understand the car insurance laws of the land.
You can file a lawsuit against the other driver if you were not at fault in the car accident.
If you do not agree with the amount paid as actual cash value bring evidence like:
- Quotes from auto dealers in your locality.
- Online prices for the same car in your area.
- Documents showing repairs you last did, custom parts and other features you installed etc.
From my own experience, do not accept the first offer from your insurance company. This is because insurance companies quote you a value leaving behind room for negotiations. You will get good prices if you prove to the adjusters that you are informed and understand bits of the laws regarding car insurance.
You should revise your policy and know whether the accident is covered or not and for best negotiations. People who are well-informed end up with good pay. I also need to remind you that it is not easy to negotiate with any insurance company because these people are experienced and have learned all the tactics of cheating clients. You will be better served if the company negotiated with your lawyer.