As a result of an auto accident, your car might be so badly damaged that it is beyond repair. This is often referred to by using the term “totaled”. A car is a deemed a "total loss" if:
- Damage to the car is so severe that it cannot be repaired safely;
- The cost of repairs is greater than the current value of the car itself; or
- The damage is so severe that state regulations require the car to be declared a total loss.
Determining a Total Loss
Your own insurance claims adjuster will arrange an inspection of your car and inform you if the car is a total loss. Once you get the information your adjuster gleans from the inspection, you will be asked to:
- Remove your personal items from the car (papers, CD's, sunglasses)
- Make arrangements to give a key to your adjuster.
- Provide your contact information for your finance or leasing company.
- Complete necessary forms.
What does the insurance company pay for a total loss?
It's never fun to have you car totaled. Nonetheless, if your policy covers a total loss, the insurance company will:
- Pay the actual cash value (ACV) of the vehicle (plus state fees and taxes) less any deductible.
- Take ownership of the vehicle then sell the vehicle to a salvage buyer (or you may keep the vehicle yourself)
How is the value of the car determined?
Your car may have sentimental value to you; or you may have already paid it off so that you have no monthly car payment. Unfortunately, these things do not matter when evaluating its value. You will only get the value of your car based on a comparison of sale prices of similar vehicles in your local area. Then, taken into account is the pre-accident condition of your car, including:
- Vehicle options
- Any damage not caused by the accident
Make sure to always try and negotiate with the insurance for a little bit more. Insurance companies are in the business of paying you as little as possible. The carriers like to use value books published by the NADA, or Kellys. Try going to www.Edmunds.com to compare their offer with what the fair value of your car is.
If you want to keep your total loss car...
No matter what your reasons for hanging onto it, you may be able to keep your total loss vehicle, rather than turning it over to the insurance company. If that's the case, the insurance company will pay actual cash value of the vehicle LESS your deductible and less a fair salvage amount.
Who gets paid for the total loss?
The payment for total loss depends on whether you own, lease or finance the vehicle.
- If you own the vehicle, you will get paid.
- If you lease, the leasing company gets paid.
- If the vehicle is financed (and the finance company is listed on your policy or on your title):
- The financing company gets paid and if the settlement amount exceeds what you owe the financing company, you will receive the balance.
- If the settlement amount is less than what you owe, you'll be responsible for paying the rest of the loan balance. This is why it is always important to purchase "gap insurance" when you buy your car to cover your unpaid balances in these situations. Check with your finance company to see if you have gap insurance, or if it is available to you. If you don't have it, I highly recommend you get it.
What do I Drive during the total loss process?
If you have rental coverage, then ask your insurance company to pay for a rental vehicle after your accident. Of course, you cannot rent forever. Ask your insurance adjuster for as much time as possible after your car is paid off to continue renting until you can get a new car. Typically, they will offer only 4-7 days.