As an experienced driver, you understand the basics of auto insurance and liability. However, there are certain scenarios that remain unclear until you find yourself in the unfortunate position of facing them firsthand. One such example is having your vehicle declared a total loss, commonly referred to as "totaling" your car. This occurs when the cost to repair damage sustained in an accident exceeds the actual cash value of the vehicle. At this point, your insurance provider will declare your car a total loss and pay out the full insured amount.
While this means you receive a check to put toward a replacement vehicle, it also means your current car will be deemed unsalvageable. The total loss designation can be emotionally difficult to process, especially if you have a long history with your vehicle. However, understanding what it means in practical terms can help you navigate the situation objectively so you get the maximum amount owed to you under the policy. This allows you to move on from a vehicle that can no longer serve you, with funds in hand for its replacement. Car accident lawyers have experience handling these claims.
What Does “Totaling” a Car Mean?
When a vehicle is deemed “totaled” after an accident, it means the cost to repair the vehicle exceeds its actual cash value. In other words, the damage to the vehicle is so extensive that it is not economically feasible to repair.
There are two common ways insurance companies determine if a vehicle should be totaled:
- The damage exceeds a certain percentage of the vehicle’s actual cash value (ACV), often around 75-90% depending on the insurance company and state laws. For example, if a vehicle’s ACV is $20,000 but the repair estimate comes in at $16,000, the insurer may declare it totaled.
- The structural integrity or safety of the vehicle is compromised. Frame damage, fire damage or flooding are examples that would likely lead an insurer to declare a vehicle totaled, regardless of the repair costs versus ACV.
When an insurance company declares a vehicle totaled, they take possession of the vehicle and provide the owner with a payment for the ACV of the vehicle before the accident occurred. The owner can then use that payment as a down payment on a replacement vehicle. Some owners may want to keep their vehicle and repair it themselves, but this risks compromising safety and the vehicle’s title will be branded as “salvage” or “rebuilt”, significantly reducing its resale value.
In summary, having your vehicle totaled after an accident is an unfortunate situation, but insurance companies follow standard procedures to determine if a vehicle should be totaled and provide fair compensation to help the owner get back on the road as quickly as possible. Understanding this process can help vehicle owners know what to expect if they find themselves in this difficult circumstance.
How Insurance Companies Determine if a Car Is Totaled
To determine if a vehicle should be totaled, insurance companies will assess the damage to evaluate if the cost of repairs exceeds a certain percentage of the car's actual cash value (ACV). Typically, if the repair costs are greater than 70-90% of the ACV, the insurance provider will declare the vehicle a total loss.
There are a few factors insurance adjusters consider when calculating the ACV and cost of repairs:
- Make, model, year, trim level, and optional features of the vehicle. The ACV is based on the private-party value of a comparable vehicle with similar attributes.
- Mileage and overall condition. The lower the mileage and better the condition, the higher the ACV. Significant dents, rust or other damage prior to the claim will lower the valuation.
- Cost of parts and labor. Repair costs are determined based on the rates in the area the vehicle is being repaired. High-end or luxury vehicles typically have higher parts and labor costs.
- Safety and roadworthiness. If the damage impacts the structural integrity or essential components of the vehicle, it is more likely to be considered a total loss due to safety reasons.
- Salvage value. The insurance company will deduct the estimated salvage value or scrap value of the vehicle from the settlement amount. The policyholder typically has the option to retain the salvage rights to the vehicle.
In summary, whether or not a vehicle is deemed a total loss following an accident depends on a combination of factors like the attributes and condition of the specific vehicle as well as the costs in your local market. The final settlement amount aims to compensate the policyholder for the actual cash value of the vehicle based on its pre-accident condition.
What Happens After Your Car Is Totaled?
Once your vehicle has been deemed a total loss after an accident, there are several steps that will follow.
Insurance claim and valuation
You will need to file an insurance claim with your auto insurance provider. They will evaluate your vehicle to determine its actual cash value (ACV) before the accident. The ACV is the fair market value of your vehicle based on its make, model, year, features, and overall condition. Your insurer will compare your vehicle to recent sales of comparable vehicles in your local market to calculate the ACV.
Settlement offer
Your insurance company will present you with a settlement offer for the ACV of your vehicle. You will need to either accept or counter their offer. Provide information on recent private party sales or dealer retail prices of comparable vehicles to support a higher counteroffer. Negotiate the best possible settlement for the value of your totaled vehicle.
Title transfer
Once you accept a final settlement offer, your insurance company will have you transfer the title of your vehicle over to them. This legally transfers ownership of the totaled vehicle to the insurance company. Failure to properly transfer the title could result in legal issues down the road.
Replacement options
With the settlement from your totaled vehicle, you will need to either purchase a replacement vehicle or pocket the money. Consider your needs and budget carefully. You may be able to find a suitable replacement vehicle for the settlement amount, or you can choose to buy a cheaper used vehicle and keep the difference, or forgo replacing the vehicle altogether if possible. The choice is yours.
Following these necessary steps after your vehicle has been totaled will help ensure you are properly compensated and able to move forward from a difficult situation. Be sure to ask your insurance agent or company representative for clarification on anything you do not fully understand regarding this process.
Options After Your Vehicle Is Deemed Totaled
Once an insurance company has deemed your vehicle a total loss after an accident, you have a few options to consider regarding next steps.
Settle the Claim
You can accept the insurance company’s settlement offer for the totaled vehicle. The settlement amount will be based on the actual cash value of the car, minus your deductible. Accepting the settlement means you are giving up ownership of the vehicle to the insurance company.
Keep the Totaled Vehicle
You can keep the totaled vehicle and receive a reduced settlement amount. The insurance company will deduct the salvage value of the vehicle from the settlement. You will retain ownership of the vehicle, but the title will be permanently marked as “salvage” or “rebuilt.” The vehicle likely cannot be driven legally on public roads again.
Negotiate the Settlement
You can negotiate with the insurance adjuster to try and get a higher settlement amount before accepting or keeping the vehicle. You may need to provide documentation showing similar vehicles with comparable mileage and condition selling for a higher price. If you believe the offer is still too low, you may need to consider obtaining legal counsel regarding next steps.
Buy Back and Repair the Vehicle
You can negotiate a “buy back” of the totaled vehicle from the insurance company for the salvage value, then pay to have it repaired in order to get it roadworthy again. You will need to have it re-titled and re-registered. The total cost to buy back and repair the vehicle often exceeds the value, so this is usually not the most practical option.
In summary, weighing your options and understanding your rights after your vehicle has been totaled in an accident can help ensure you make the choice that is right for your situation. Consulting with legal professionals focused on car accident and personal injury law may provide additional guidance on next steps.
How to Dispute the Insurance Company’s Decision
If you believe your insurance company improperly deemed your vehicle a total loss after an accident, you have the right to dispute their decision. Here are the steps to take:
Request a Re-Inspection
Ask your insurance adjuster to re-inspect the vehicle to reassess the damage. Provide photos and estimates from an auto body shop indicating the vehicle can be repaired for less than the total loss threshold in your state. The adjuster may revise their decision, allowing you to retain the vehicle.
Ask for a Third-Party Appraisal
If re-inspection is denied or does not change the decision, get an independent appraisal from a certified auto appraiser. They can determine if the insurance company's judgment of the vehicle value and cost of repairs was fair and accurate. Present the appraiser's report to your insurance company and request they reconsider based on this new evidence.
File an Appeal
As a last resort, you may need to formally appeal the total loss decision. Most insurance companies have an internal appeals process. Submit a written request for an appeal hearing where you can present evidence from auto body shops, appraisers, and photos showing the vehicle can be fixed rather than totaled. The appeals board will review all evidence and make a binding decision.
Contact Your State Insurance Regulator
If your insurance company still refuses to overturn the total loss ruling after following the proper appeals steps, you can file a complaint with your state's insurance regulatory agency. They oversee insurance companies and can investigate whether the total loss was handled properly according to regulations in your state. They may be able to persuade the insurance company to reevaluate or overturn their decision.
While the process can be time-consuming, disputing a total loss claim is often worthwhile to potentially gain thousands of dollars more for your vehicle or avoid having to replace it entirely. Remain persistent and continue escalating your claim to higher authorities until you have exhausted all options.
Call Fletcher Law For Help With Your Totaled Car Injury Claim
If your vehicle has been in an accident and is considered “totaled” by your insurance company, it means the cost to repair the damage exceeds the actual cash value of the vehicle. In this case, the insurance company will pay you the fair market value of the car rather than repairing it.
When your car is totaled in an accident that was not your fault, you may be entitled to recover additional compensation. The attorneys at Fletcher Law have extensive experience helping clients in totaled vehicle claims get the maximum settlement possible to cover the loss of their vehicle.
We will review the details of your accident and insurance policy to determine if the insurance company's valuation of your totaled car was fair and accurate. If not, we can challenge their assessment and demand a higher settlement on your behalf. We will also investigate the possibility of recovering additional damages related to the loss of your vehicle, such as loss of use, rental car fees, towing and storage charges.
Do not sign any release or accept a settlement from the insurance company until you have consulted with our attorneys. We offer free, no-obligation consultations to review the merits of your totaled vehicle claim and determine the best way to proceed to maximize your financial recovery. Call us today to schedule your free consultation and get the answers and advice you need regarding your legal options and next steps. Our goal is to take the burden off your shoulders and handle all communication with the insurance companies on your behalf. With our experience and proven track record of success, Fletcher Law is dedicated to fighting for fair compensation for our clients.