Business & Investment

What to do if your car is totaled

An accident occurs. The driver is late to pick up his daughter from the nursery, runs a stop sign and crashes into your car. A storm hits the town and uproots the trees in your front yard that land on your car. Then boom, your car will be summed.

If you have car insurance, you will probably expect your insurance company to cover the damage. Fortunately, if the cost of repairs is cheaper than the value of the car, that’s the case. However, if the cost of the repair is higher than its value, the insurance company declares the vehicle totally lost. The company will then refund you the actual cash value of the car, not the total cost of the repair.

The mechanism is as follows.

What is a total car?

The insurance company “totals” the vehicle if the cost of repairing the damage exceeds the market value of the vehicle. If it is not safe to drive even if you repair it, they may declare it a total loss. When the insurance company sums up your car, they pay you the actual cash value (ACV) of the car. The actual cash value was the value just before the loss. The ACV is less than the amount paid to the vehicle, even if it is relatively new, because it includes a depreciation reduction.

When are cars considered total?

It depends on the insurance company and where you live. Each state sets a threshold for declaring total vehicle loss, but carriers can choose to use a lower threshold. Insurers often sum up cars, even if the repair cost is lower than, or even much less than, the actual cash value of the vehicle. This is because it can be difficult to determine the full extent of damage before starting repairs.

For example, in Arizona, the state threshold for summing cars is 70% of ACV. Suppose you have a vehicle worth $ 10,000. Under state law, insurers are required to declare a total loss if the cost of the damage is $ 7,000 or more. However, if the insurance company’s threshold is 60% of ACV, it will be added up if the repair cost is over $ 6,000.

“Some carriers [use a lower threshold] Because when you’re adjusting the vehicle, and when you’re looking at it after a loss, it’s still with you. And most of the time you can only see the exterior and undercarriage of the vehicle. When the body shop disassembles the vehicle and pulls the panel back, more damage is usually found, “said Josh Damiko, vice president of insurance operations at Jerry, a car insurance comparison service.

If the Body Shop finds more damage after starting the repair, submit a supplement to the insurance company for the additional damage. “Some carriers know what a supplement will look like on a damaged vehicle. They will consider this in advance when deciding when to declare a vehicle as total loss.” He said.

Do not miss it: You can’t believe what people are paying for cars now

What kind of insurance does the totaled car have?

The type of insurance that will be started if your car is totaled depends on the loss situation. There are four types that may cover the total loss.

  • collision: If you collide with another car or an immovable object such as a fence or streetlight pole, you will kick in. Read our story about collision insurance.

  • comprehensive: Covers non-collision-related damage caused by a variety of causes, including bad weather, vandalism, theft, and animals.

  • Liability for property damages: If you have an accident and another driver has an accident, their property liability insurance should cover the damage to your car — if they are insured.

  • Uninsured / uninsured driver: In the event of an accident, your uninsured / uninsured driver’s property liability should cover you. There is no coverage of this type, but in the event of a collision, repair costs will be incurred.

If you have a loan or lease, the lender will probably require you to maintain conflict and inclusiveness. Otherwise, these coverages are optional in all states.

You can skip them, but if you only have liability insurance to meet the state’s minimum insurance requirements, you risk yourself. Liability insurance only pays for injuries or damages you cause to someone else. If you make a mistake in an accident or have damage not related to a collision, it does not cover the repair of your car.

See also below. Why is this discreet car such a magnet for thieves?

How GAP Insurance Helps

If you have a loan or lease, you still have to pay the lender, even if the car is totaled and you can no longer drive. However, the insurance company only pays the actual cash value of the car in case of loss. Cars are depreciated quickly, so if you’re leasing or financing a car purchase, especially if you have little or no money left, that may not be enough.

read: More car shoppers are thinking about EVs, but still refraining

Unless you have, you are responsible for making up for the difference GAP coverage.. GAP covers the difference between the amount payable on a loan or lease and the amount paid by the insurance company. Many policies cover conflicts and comprehensive deductions.

How does an insurance company determine that a car is a total loss?

To determine if a car is a total loss, the insurance company needs to calculate the actual cash value of the car just before the loss and estimate the amount of the loss. Most insurers work with third-party vendors that aggregate vehicle data to determine ACV. The insurance company then inspects the damage and sends an assessor to estimate the repair cost.

If the loss exceeds the threshold set by the state or insurance company to total the car, the insurance company declares it a total loss. If this happens, the carrier will refund the actual cash value of the vehicle.

The insurance company may pay for repairs even if you are in a car accident and the vehicles are not fully totaled.

Read again: These are the most expensive and least expensive cars to insure.

Can I store the total vehicle?

You may be able to keep the total vehicle, but it depends on the law of your state. “The best way to start this process is to talk to the carrier about purchasing a total vehicle,” Damiko said. If you can buy back your car, you will need to contact your local DMV to find out what form you need to fill out and the steps to start your purchase.

If you are allowed to leave your car, you will not be able to drive immediately. “If a car is considered total loss, it must be repaired and passed inspection. Ultimately, you will be given the title of the car being rebuilt or recovered,” Damiko said. To be able to drive a car on the road, you need to provide the DMV with a title and proof of inspection in order to register the car.

And don’t forget your insurance. In most states, you can’t drive legally without it. However, there may be restrictions on the types of coverage that insurance companies sell. “Some insurers insure only vehicles with titles that have been recovered or rebuilt for liability purposes only. It is difficult to assess the current state of the vehicle, so they comprehensively cover it. Or did not cover the extent of the collision, “Damiko said.

If you do not plan to drive a total vehicle, you may also be able to:

  • Store it and use it for another car part, or sell the part for additional cash.

  • Sell ​​it to a junkyard or demolition yard.

  • Donate to a local charity.

look: This is what may actually happen to your donated car

How can I add up the cars?

can not. The insurance company decides whether to sum the vehicles based on the value of the vehicle and the degree of damage. If the cost of repairing a vehicle exceeds a certain percentage of the actual cash value, the insurance company declares it a total loss. If the threshold is not exceeded, the insurance company will not add it up.

How much can you expect from total car insurance?

It depends on the vehicle. When the insurance company sums the cars, the actual cash value of the car is paid just before the loss occurs. The ACV takes into account depreciation, including wear, mileage, and previous accidents, so your refund will be less than you paid for your car.

You can use the payment from the insurance company to help you buy a new car. However, unless your insurance policy includes replacement coverage for a new car, it is not enough to cover a new version of the same car you are currently driving.

If the insurance company’s payments appear unfair, you can file an objection. But insurance companies aren’t going to accept your words that cars are worth more than their quote. So you will need to do some research.You can see the following sources Kelley Blue Book Gather information about what similar cars are sold for in your area. Present the information to the adjuster to see if an agreement can be reached.

“If the appraiser can’t solve it, you can go out and hire a private appraiser,” Damiko said. But you will have to pay it out of your pocket. If the appraiser’s quote is higher than the insurance company offers, you can use it to negotiate. If not, you may need to accept the insurance company’s offer.

Steps to take when your car is totaled

If your car is summed up, there are a few steps you should take to resolve your claim and get back on the road.

  • I will make a complaint. Contact your insurance company to make a claim, just as you would with a fender vendor.

  • Evaluate the damage. The insurance company will send an assessor to assess the damage to your car. The adjuster will perform a visual inspection and estimate the repair cost.

  • Know the fair market value of your car. The insurance company uses the actual cash value of the car immediately before the damage to decide whether to declare the car a total loss. You can get a fair market value quote for your car from tools such as the Kelley Blue Book or by seeing what similar cars are for sale in your area.

  • Please contact the lender (if applicable). If you have a loan or lease, your car is the one that secures your funding. Therefore, you need to inform the financial company about the damage — and you have to keep paying. Suspension can adversely affect credit and make it more difficult to finance new vehicles. When the insurance company resolves your claim, they send the payment to the lender or leasing company.

  • Negotiate a claim with your insurance company. If you think your car’s ACV insurance company has too low a rating, you can negotiate a payment. But you need to show why your car is more valuable than what the insurance company offers.

  • Buy a new car. The payments you receive from the carrier may not be enough to buy a new version of your old car. However, you can use it to pay a down payment for your new vehicle.

This story originally continued KBB.com..

What to do if your car is totaled

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