What to do if your car is totaled

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Accidents happen. A driver is late to pick up his daughter from daycare, runs over a stop sign, and crashes into your car. A tornado runs through town, uprooting trees in your front yard, landing on top of your car. Then boom, your vehicle is a total.

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If you have auto insurance, you will probably expect your insurer to cover the loss. Fortunately, they will if the cost of the repair is less than the cost of the car. But if they cost more to repair than its cost, the insurer will declare the vehicle a total loss. The company will then reimburse you the actual cash value of the car — not the total cost of the repair.

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It works like this.

What is total car?

Insurance companies “total” a car when the cost of repairing the damage exceeds the market value of the vehicle. They may even declare it a total loss if it would still be unsafe to drive if it were repaired. If the insurer totals your car, they will pay you the actual cash value (ACV) of the vehicle. Actual cash value is how much it was worth just before the loss. This includes a reduction in value for depreciation, so the ACV will be less than what you paid for the vehicle, even if it is relatively new.

When is a car considered a total?
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It depends on the insurance company and where you live. Each state sets a limit for vehicles to declare a total loss – but carriers can choose to use a lower limit. In many cases, the insurance company will total a car even if the repair cost is less than the actual cash value of the vehicle — sometimes much less. This is because it can be difficult to determine the full extent of the damage before repairs can begin.

For example, in Arizona, the state limit for a car is 70% of its ACV. Let’s say you have a vehicle that costs $10,000. Under state law, the insurer must declare it a total loss if the cost of the damage is $7,000 or more. But if the insurer’s limit is 60% of the ACV, it will be totaled if the repair cost is $6,000 or more.

“The reason why some carriers [use a lower threshold] That’s because when you’re adjusting a vehicle, and you’re looking at it after damage, it’s still there together. And for the most part, you can only see the exterior of the vehicle and the undercarriage. When the body shop takes the vehicle apart and pulls the panel back, they usually find more damage,” said Josh Damico, vice president of insurance operations at Jerry’s, a car insurance comparison service.

If the body shop suffers more damage after initiating repairs, they file a supplement with the insurance company for the additional damage. “Some carriers have an idea of ​​what supplements are going to look like on a damaged vehicle. When they declare a total loss to a vehicle, they take this into consideration in advance,” he said.

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Which insurance covers Total Car?

If your car has a total total, the type of insurance coverage depends on the circumstances of the loss. Here are four types that can cover a total loss.

If you have a loan or lease, the lender will likely require you to maintain a collision and comprehensive. Otherwise, these coverages are optional in every state.

You can omit them, but if you only have liability coverage to meet your state’s minimum insurance requirements, you are putting yourself at risk. Liability coverage only pays for injuries and damages caused by you to someone else. It will not cover repairs to your vehicle if you are at fault in an accident or have non-accident related damage.

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How GAP Insurance Can Help

If you have a loan or lease, you still have to pay your lender, even if your car is totaled and you can no longer drive it. However, the insurance company will only pay the actual cash value of the car at the time of loss. Since vehicles depreciate quickly, it may not be enough to pay your dues if you’re leasing or financing the purchase of your car—especially if you have little or no money. Do not put

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Unless you have GAP coverage, you will be responsible for making up the difference. GAP covers the difference between the amount you owe on your loan or lease and the amount paid by the insurance company. Many policies also cover your collision or comprehensive deductible.

How does the insurance company determine if the car is a total loss?

To determine whether a car is a total loss, the insurance company must calculate the actual cash value of the vehicle immediately before the loss occurs and estimate the amount of the damage. Most insurers work with a third party vendor that collects vehicle data to determine ACV. The insurance company will then send an adjuster to inspect the damage and estimate the cost of the repair.

If the damage exceeds the limit set by the state or the insurance company for the sum of the car, the insurer will declare it a total loss. If this happens, the carrier will reimburse you the actual cash value of the vehicle.

Even if you get into a car accident and your vehicle isn’t completely complete, your insurance company may still pay for your repairs.

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Can I keep my total vehicle?

You may be able to have a total vehicle, but it depends on the laws of your state. “The best way to start this process is to talk to your carrier about buying a total vehicle back,” Damico said. If you can buy the car back, you’ll need to contact your local DMV to find out what forms you’ll need to fill out and the steps you’ll need to take to start buying.

If you’re allowed to have a car, you won’t be able to drive it right away. “Once a car is deemed a total loss, it must be repaired, pass inspection, and eventually you will be given a rebuild or salvage title for the vehicle,” DeMico said. To register the car you will need to provide proof of title and inspection to the DMV so you can drive it on the road.

And don’t forget about insurance. You cannot legally drive without it in most states. However, you may be limited in the types of coverage the insurance company is willing to sell you. “Some insurance companies only insure salvaged, or reconstructed-titled vehicles for liability. They will not cover it for comprehensive or collision coverage because the current condition of the vehicle is difficult to assess,” Damico said.

If you don’t plan on driving your total vehicle, you may also be able to:

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How do I total my car?

you could not. Insurance companies decide what the vehicle is worth and whether or not it is based on the extent of the damage. If the cost of repairing the vehicle exceeds a certain percentage of its actual cash value, the insurer will declare it a total loss. If it does not exceed the limit, the insurer will not sum it up.

How much can you expect from total car insurance?

It depends on the vehicle. When an insurance company totals a car, it pays the actual cash value of the vehicle immediately before the loss occurred. ACV factors in depreciation, which includes wear and tear, mileage and past accidents, so the reimbursement amount will be less than the amount you paid for the car.

You can use the settlement amount from the insurance company to help you buy a new vehicle. However, it will not be enough to cover a newer version of the same car that you are currently driving unless your insurance policy includes new car replacement coverage.

If you don’t think the insurance company’s payment is fair, you can dispute it. But the insurer isn’t going to take your promise just for the fact that the car is worth more than they expected. So, you will need to do some research. You can check sources like kelly blue book And collect information about similar car sales in your area. Present the information to the adjuster and see if you can come to an agreement.

“If you can’t solve it with an adjuster, you can go out and hire a private appraiser,” Damico said. But you have to pay for it out of pocket. If the appraiser’s estimate exceeds what the insurance company is offering, you can use that to negotiate. If not, you may have to accept the insurer’s offer.

Steps to take when your car is total

If your car is totaled, there are steps you need to take to settle your claim and get back on the road.

this story originally ran KBB.com,

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