Total Loss Twist: Understanding Deductible Complications

If your car is totalled, it means that the insurance company has decided that the cost of repairing the damage is higher than the value of the car. In this case, the insurance company will reimburse you for the value of the car, minus your deductible and any other fees. The deductible is the amount you agree to pay out-of-pocket after a covered loss, and it is usually a set dollar amount. For example, if your car is valued at $5,000 and you have a $500 deductible, the insurance company will pay you $4,500.

What is a totalled car?

A "totalled" car is a term used by insurance companies to describe a car that is not worth repairing, usually because the cost of repairs exceeds the car's value. This is also referred to as a "total loss".

Insurance companies have their own formulas for determining whether a car is totalled, and these vary by state. For example, an insurance company may deem a car a total loss if the cost of repairing it exceeds 80% of its value.

If your car is totalled, the insurance company will pay you the actual cash value of the car before it was damaged, minus your policy's deductible. You may also be able to keep the car, depending on your state's laws.

How is a totalled car's value calculated?

The value of a totalled car is calculated by determining the vehicle's actual cash value (ACV). The ACV is the amount the vehicle was worth immediately before the loss, including a reduction in value for depreciation. This means that the ACV will be less than the original purchase price of the car, even if it is relatively new.

To calculate the ACV, insurance companies use a third-party vendor that aggregates vehicle data. They will then send an adjuster to inspect the damage and estimate the repair costs. If the damage exceeds the total loss criteria set by the insurance company or the state, the vehicle will be declared a total loss.

• Confirm the car's value before the accident by checking reputable pricing websites. Consider the condition of the car before the accident, the current mileage, and any aftermarket components installed.
• Calculate all necessary fees, including taxes, registration, and title fees. These fees are typically added to the payout for the totalled car as they are incurred costs due to the accident.
• Calculate the car's ACV on reputable websites. Find the car's retail value when selling to a private party and the purchase dealer value. Sum these values and divide their total in half to get the ACV.
• Alternatively, check recent comparable car sales in your area or anywhere you choose online. You can also inquire with a car dealership or repair shop if you believe they can provide a qualified estimate.

It is important to note that insurance companies may have their own methods for computing the ACV of a totalled car, and the final payout may differ from the calculated ACV.

What happens when an insurance company totals a car?

When an insurance company totals a car, it means that the cost of repairing the vehicle exceeds the vehicle's book value at the time of the crash. This is also referred to as a "total loss".

Each US state has its own threshold for declaring a vehicle a total loss, but insurance carriers may choose to use a lower threshold. The insurance company will often total a car even if the repair costs are less than the vehicle's actual cash value (ACV). This is because it can be difficult to determine the full extent of the damage before repairs begin.

If your car is deemed a total loss, the insurance company will reimburse you for the ACV of the car, minus your policy deductible. If you have a loan or lease on the car, the settlement check will go to the lender or leasing company for the balance remaining. If you own the car outright, you will receive the check.

If you disagree with the insurance company's settlement offer, you may be able to negotiate for a better deal. It's important to gather supporting documentation, such as a list of your car's features, the estimated retail value from sources like NADA, and comparable sales for vehicles of a similar year, make and model in your area. If you can't come to an agreement with the insurance company, you can seek help from your state's insurance department.

You may be able to keep your car, depending on the laws in your state. If you choose to do so, the insurance total loss payout will be reduced by the car's salvage value. You will need to repair the vehicle and have it pass a state-approved inspection to confirm it meets safety requirements. You will then receive a rebuilt or salvage title, which may make it harder to insure the vehicle.

What does insurance pay for a totalled car?

When a car is deemed a total loss, an insurance company will pay its actual cash value (ACV), which is the car's value immediately before the damage occurred. This amount is calculated based on the car's make, model, year, mileage, and trim level, as well as the sales price of similar cars in the area. The insurance company will subtract your deductible from this amount and send you the remaining sum.

For example, if your car is worth $10,000 and you have a $500 deductible, the insurance company will pay you $9,500. If you have a loan or lease on the car, the settlement check will go to the lender or leasing company.

It's important to note that the definition of a "totaled car" varies by state and insurance company. Generally, a car is considered totaled when the cost to repair it exceeds its value, or when it is deemed unsafe to drive even after repairs.

If you believe the insurance company's settlement offer is too low, you can appeal the decision and try to negotiate a higher payout. You can also keep your totaled car, depending on your state's laws, but the salvage value will be deducted from your settlement amount.

Can I buy back my totalled car?

Whether you can buy back your totalled car depends on your state's laws and the insurance company's policies. If you can buy it back, you'll need to contact your local DMV to find out what forms you need to complete and the steps to take to start the purchase.

If you're allowed to keep the car, you won't be able to drive it right away. You'll need to get it repaired and restored, and then it will need to pass a state-approved inspection to confirm that it meets the state's safety requirements. If your car passes the inspection, you'll get a "rebuilt title".

However, you may run into some problems getting auto insurance for a rebuilt-title car. Car insurance companies view cars that had a previous salvage title as a higher risk to insure. Some car insurance companies won't offer optional coverage types (like collision and comprehensive insurance) or won't offer any coverage at all.

If you decide to buy back your totalled car, you'll need to restore it to a condition where it is safe to drive and insurable. You will also need to continue making payments on any existing car loans and keep up with the insurance payments.

The pros of buying back your totalled car include:

• You can sell it for parts.
• It costs you less money.
• Sentimental reasons.
• It's fixable.

The cons of buying back your totalled car include:

• Hidden damage.
• Loss of value.
• Cost of keeping it.
• Lots of hassle.

Frequently asked questions