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If you have car insurance, you’d generally expect your insurer to cover the damage. Fortunately, they will if the repairs are less than the car’s value. However, if the repairs are more expensive than the vehicle’s value, the insurer will consider the vehicle a total loss. The firm will then compensate you for the car’s actual cash value, or ACV, rather than the whole cost of the repairs.
In this article, we’ll go over some of the fine print in your policy that applies when your insurance company deems your automobile a total loss commonly known as your car being totaled.
What Is A Totaled Car?
When the cost of repairing the damage exceeds the vehicle’s book value at the time of the incident, insurance companies “total” it. It’s a combination of basic math and your state’s regulations.
In addition, insurers will total a vehicle that they believe is still unsafe to drive even after all necessary repairs have been completed. They may even declare it a total loss if driving it is risky, even if you repair it.
If your car is totaled, the insurer will pay you the vehicle’s actual cash value (ACV). The actual cash value is the amount the car was worth immediately before the loss. It takes into account depreciation, thus the ACV will be less than what you purchased for the vehicle, even if it appears to be relatively new.
It’s worth noting that each insurance company may have its own set of rules for deciding when an automobile is considered totaled. As a result, it’s best to examine your insurance policy or chat with your insurance provider directly to understand their criteria for declaring a vehicle a total loss.
What Insurance Covers A Totaled Car?
The sort of insurance coverage that applies if your vehicle is totaled is determined by the circumstances of the loss. Here are four types of insurance that may cover a total loss.
- Collision– If you collide with another automobile or an immovable obstacle, such as a fence or light, this feature will activate.
- Comprehensive-Covers non-crash-related damage caused by a variety of factors such as storms, floods, and other severe weather, vandalism, theft, animals, and more.
- Property Damage Liability-If you are involved in an accident and another motorist is at fault, their property damage liability policy should cover the damage to your car if they are insured.
- Uninsured/Underinsured Motorist– If you are involved in an accident and the at-fault driver is not insured, our uninsured/underinsured motorist property damage coverage should cover you. If you don’t have this form of coverage and have a collision, it will pay for the repairs.
How Do Insurance Companies Determine A Total Loss?
To establish if an automobile is a total loss, the insurance provider must evaluate the vehicle’s actual cash value immediately before the loss and estimate the level of damage. Most insurers use a third-party vendor to gather vehicle data in order to calculate the ACV. The insurance company will then dispatch an adjuster to evaluate the damage and estimate the repair costs.
If the damage reaches the threshold specified by the state or insurance provider for declaring an automobile totaled, the insurer will consider the vehicle a total loss. If this occurs, the carrier will refund you for the vehicle’s ACV.
Even if your car is not fully destroyed in a car accident, your insurance company may still pay for repairs.
Steps To Take When Your Car Is Totaled
- File A Claim- Contact your insurance company to file a claim, just like you would if you were in a minor collision.
- Assess The Damage-The insurance provider will send an adjuster to inspect the damage to your vehicle. The adjuster will perform a visual evaluation to determine the cost of repairs.
- Know Your Car’s Fair Market Value-The insurer will determine whether to declare your vehicle a total loss based on the actual cash value of your car immediately prior to the damage.
- Contact Your Lender-Your vehicle secures your funding if you have a loan or lease. As a result, you must notify the financing firm of the loss and continue to make payments. If you quit, it may have a negative impact on your credit, making it more difficult to obtain financing for a new vehicle. When your insurance claim is resolved, the lender or leasing business will be paid.
- Negotiate The Claim With The Insurer– If you believe the insurance company’s evaluation of your car’s actual cash value is too low, you can negotiate a higher reimbursement. However, you must demonstrate why your vehicle is worth more than the insurer’s offer.
- Shop For A New Or Used Car-The reimbursement you receive from the carrier is unlikely to be sufficient to purchase a new version of your old car. However, you can use it as a down payment.
Pros Vs. Cons OfKeeping A Totaled Car
Pros
- An older vehicle with a low market value may be totaled despite just minor cosmetic damage. In this situation, you might not even need to fix it.
- It can be used as a parts vehicle for restoration or repair tasks.
Cons
- If unexpected problems arise during the repair process, the car may cost more to fix than the original estimate.
- After being repaired, the vehicle must pass a state inspection.
You must obtain a salvage or rebuilt title indicating that the vehicle was a total loss.