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Is My Car Totaled? How Insurers Determine Total Loss

Car accidents are incredibly stressful, especially if your car’s damage is significant. Many car owners worry if the insurance companies will total the vehicle. This information can help you determine whether an insurance company decides your car is a total loss or chooses to sign off on the repairs.


When Is a Car Considered Totaled?

If you are in a severe auto accident that causes extensive damage, your insurance company may decide to declare a total loss of the car. In other words, your car is “totaled.” When the car’s damage costs more to fix it than the car is worth, it is considered a total loss. However, that does not mean that the repairs will cost more than the vehicle’s actual value. With a totaled car, the insurance company has decided it is not worth the cost to repair it. Calculating the total loss value of a vehicle is not easy to determine, and those calculations may vary depending on the state and insurance company. You will want to know your vehicle’s value because it can help you negotiate a better payout for your accident claim. It can also help provide you with the correct information to determine if you are getting enough to pay off your car loan.

Insurance companies use many variables to determine the value of your car. Some of these factors include:

  • Vehicle type: High-end and classic cars are valued higher.
  • Age of vehicle: Newer cars have a higher value than older cars.
  • Condition of vehicle: Mileage, tire wear, interior, and other factors can have an impact on the value of your car.


If the insurance company determines that you may have contributed to the accident in any way, they could reduce the total loss value. This calculation varies by state. It is important to understand your state’s laws regarding contributory negligence. Insurance companies often use a percentage to determine whether the car is totaled. Most totaled cars have damage between 70 and 75 percent of the value. For example, if your vehicle is worth $10,000 and the cost to repair it is $7,000, the insurance company will likely total it. Here are some other things to take into consideration for your vehicle.


Older Models

The damage to a new car needs to be severe for it to be totaled. However, insurance companies will declare older vehicles as a total loss, and that can happen even if the damage appears minor. Insurance companies total older cars because they have a lower resale value than newer cars. It is often difficult to find replacement parts for older cars, and it may be expensive to install those parts. If your vehicle is totaled, the insurance company will pay you the car’s value before the accident. After an older car is deemed totaled, your vehicle will most likely be sent to an auto salvage yard. Some auto repair training schools might purchase wrecked vehicles for students to use for practice.

Old Model Luxury Car

Actual Cash Value

You might have heard about the term “actual cash value.” If you could sell your vehicle before the accident, the actual cash value is what you would receive for the car. Most traditional car insurance policies cover vehicles using a formula to determine the real cash value. As mentioned, if the repairs cost more than a specific percentage of your car, it might not be worth fixing your vehicle. However, there are some exceptions to the rule. Many classic cars can avoid being deemed totaled. You also might not face a complete loss if you have additional coverage on your vehicle, such as gap insurance.


Determining Your Vehicle’s Value

There are some things that your insurance company will use to determine the actual value of your vehicle. Your car’s total loss is determined according to its year, make, model, physical wear and tear, mileage, and damage caused by your accident. If your vehicle is in excellent condition, it will have a higher actual value than an older and worn out car. However, you need to keep in mind that vehicles can quickly depreciate. Even those minor accidents can cause insurance companies to declare your car to be a total loss.


Checking the Value

Insurance companies use their proprietary software to calculate your vehicle’s actual cash value after an accident. Unfortunately, you cannot use their software to determine your vehicle’s value. However, there are a few ways you can get an idea about your car’s value. If you have been involved in an accident, you can determine how much your vehicle is worth. Write down the year, make and model of your car, and the mileage at the time of the accident. You can then look up your vehicle’s value through various websites, like the Kelley Blue Book, National Automobile Dealer’s Association, or Edmunds. It is recommended that you check all of these sources to get an average value as they may all provide different information. There is a word of caution. Many claims adjusters will tell you that insurance companies do not pay claims based on the Kelley Blue Book values.

You might also want to check out the classified ads to see car prices in your area. The quality, model, and features of similar vehicles can help you determine your car’s value, and you can use it as a base for your insurance negotiations. These resources will only provide a ballpark figure. You don’t want to get your heart set on these estimated values.

Vehicle Inspection

Make Sure Your Upgrades Are Counted

If you have made any recent repairs to your car, you will want to provide receipts to calculate your replacement costs. A new transmission or engine can make a difference in the amount of payout money from your insurance company. Add the value of any options included in your car, such as high-quality speaker systems or custom paint accents, to the average you determined in your research. This should give you a value close to what the insurance company will offer. If you have aftermarket options on your vehicle, be sure to inform the insurance company before they provide you with the value they intend to pay. For any of those upgrades, you must keep track of your receipts. These upgrades can make a difference in keeping your vehicle safe from being declared a total loss.

Avoiding Issues With Your Insurance

There are a few words of caution when dealing with an insurance company. It is not uncommon for many car owners to receive a total loss payout check less than the total of your car loan amount. These situations can occur in several different ways. For example, your car can depreciate faster than the rate you are paying down for your loan. Your car loan might also be extended with lower rates, or you have wrapped your prior auto loan into the vehicle’s current loans. If you have included any extras like taxes, title fees, and extended warranties into your loan, you might still owe money after an insurance payout. Finally, those little or no down payment auto loans can cause you to take a loss when your vehicle is declared totaled.


You Can Avoid Some Shortfalls

For those financed cars that have been totaled, your insurance company will likely make a claim check payable to you and your lender. You will have to agree with your lender on how to release that insurance money. In most cases, the lender will be reimbursed first, and any remaining money will be released to you.

If you want to avoid owing money on your totaled car, there are a few things that you can do to prevent this scenario. You should think about collision or comprehensive coverage. These coverage plans can help pay to replace a totaled vehicle. For many owners who are leasing or financing their cars, these two separate coverages are required on your car insurance policy. If your car is already paid off, then these policies are optional. However, if your vehicle is totaled without these coverage plans, then you may have to pay out of pocket to purchase a replacement vehicle.

Gap insurance will also make up for the difference between your car’s actual total value and the amount you owe on the vehicle. With new car replacement coverage, you can avoid these monetary shortfalls. All these measures can help you to combat any issues with depreciation. You might also want to pay down as much as possible on your loan, warranties, title fees, and taxes.

Signing Paperwork

Is My Car Totaled?

Those who have been involved in an accident are probably worried about their vehicles. In the worst-case scenario, your car will be deemed totaled by the insurance company. If your car has been in an accident, contact Elmer’s Auto Body today to arrange for a no-obligation consultation. With the latest technology, we can help get your vehicle back to its original condition. Need an auto body shop near me? Make sure to reach out to us. Please give us a call at (856) 218-0202.

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