Auto Insurance Total Loss: Last Year's Overview

In the United States, insurance companies “total” a car when the cost to repair the damage exceeds the vehicle's book value at the time of the crash. Each state has its own threshold for declaring a vehicle a total loss, but carriers may use a lower threshold. A car may also be considered a total loss if it meets certain criteria set by the state. For example, the threshold for totalling a car in Alabama is 75% or greater of its actual cash value. If the damage costs $7,500 or more, the insurer must declare it a total loss.

What to do if your car is totaled but still drivable

If your car is still drivable after being totaled, you may be surprised that it is still operable. However, before taking it back on the road, there are several important steps to take. Firstly, it is crucial to assess the extent of the damage by having a qualified mechanic conduct a thorough inspection. This evaluation should cover central components such as the engine, brakes, tires, steering, and structural integrity to ensure they meet safety standards.

Secondly, consider the legal implications. The requirements for driving a totaled vehicle vary by state. For example, in California, a salvage title is necessary for legally driving a totaled car, which involves obtaining approval from the Department of Motor Vehicles (DMV) and meeting the state's minimum insurance requirements. This will likely impact your insurance premiums.

Thirdly, review your insurance policy. If you have collision or comprehensive coverage, your insurance company may pay out the actual cash value (ACV) of the car before the accident. The ACV is the market value of the vehicle at the time of the accident, which can be determined by researching similar cars in your area. If you have gap insurance, it will cover the difference between the outstanding loan balance and the ACV of the vehicle.

Next, decide whether to keep the car or not. If you choose to keep it, you will need to obtain a salvage title and explore your options for repairs and insurance. Keeping a totaled car can have drawbacks, such as limitations on future insurance coverage and resale value. Additionally, there may be emotional attachments or alternative uses for the vehicle that influence your decision.

Finally, if you choose to part ways with your totaled car, you have several options. You can accept the insurance payout and move on, or you can appeal the settlement if you believe the amount is too low. Alternatively, you can sell the car to a junkyard, trade it in at a dealership, repair it yourself, or donate it to charity and claim a tax credit.

What to do if you still owe money on a totaled car

If your car is deemed a "total loss" after an accident, you will still be responsible for paying off any outstanding balance on your car loan. The insurance company will pay you the actual cash value (ACV) of the car, which is its market value at the time of the accident, not what you paid for it. This amount is often less than the total loan amount, leaving you with a balance to pay on a car you can no longer drive.

• Review your car loan: Understand how much you owe on your car loan. The insurer will pay the settlement money to your lender first, and you will receive any remaining money.
• Research your car's ACV: Before agreeing to an insurance payout, research your car's ACV by looking at auto websites, newspapers, car dealerships in your area, and online tools like Kelley Blue Book. This will help you determine a fair settlement amount.
• Consider keeping your car: You usually have the option to keep your totaled car. However, the insurance company will deduct the salvage or junk value (the amount they could get from selling it for parts) from your settlement. You will need to have the car repaired, inspected, and reinsured before you can drive it again, which can be costly.
• Purchase Gap Insurance: Gap insurance covers the difference between your car's ACV and the amount you owe on your loan. It is typically available from lenders and most car insurance companies. While it is not cheap, it can protect you from financial risk if you owe more than your car is worth.
• Negotiate with the insurer: If you disagree with the insurer's valuation of your car, you can provide documentation of upgrades, maintenance records, and current photographs to prove that your car is in better condition than assessed. You can also hire your own appraiser and mechanic to provide a second opinion.
• Contact a lawyer: If you have questions about your rights and options, consider consulting a car accident lawyer. A lawyer can help you understand your options, negotiate with insurers, and represent you in court if necessary.

How to get the most money from insurance for a totaled car

If your car has been declared a total loss after an accident, you may be unhappy with the insurance company's settlement offer. Here are some tips on how to get the most money from insurance for a totalled car:

Understand the Total Loss Concept

In most cases, a car is considered a total loss when its repair cost exceeds its actual cash value. Insurance companies often decide a car is totalled when the repair cost is over 65-80% of its value.

Conduct Independent Research on the Vehicle's Worth

Before accepting the insurance company's offer, get an independent valuation of your vehicle. Factors that affect its value include the make, model, year of manufacture, condition, features, pre-accident condition, mileage, and market conditions in your area. You can use online tools and websites like Kelley Blue Book, Autotrader, and National Automobile Dealers Association guides to determine its worth.

Provide Supporting Documentation

Provide all relevant documents, including the sticker that lists the car's details when purchased, accident reports, insurance policies, and maintenance records. This helps establish the condition of your car before the accident and supports your claim for a higher valuation.

Negotiate with the Insurance Company

Understanding your auto insurance policy is crucial. Know your coverage limits, exclusions, and how much you're entitled to in case of a total loss. Provide documents of all interactions with the insurance company, including emails, letters, and phone call logs. Exercise patience and persistence, as negotiations may take time and effort. Stay calm, respectful, and polite during the process.

Be Clear with Your Intentions

Clearly state your preferred settlement amount and provide reasoning and evidence to back it up. Present copies of the latest valuation report, an independent appraisal report, the policy document, and receipts for any aftermarket accessories.

Speak with a Manager

If negotiations with the initial representative are not progressing, request to speak with their manager, who may have more authority to make decisions.

Utilise a Third-Party Appraisal

Consider hiring an independent appraiser, who can provide an unbiased opinion on your car's worth. This can help establish a fair market value and prove that the insurance company undervalued the total loss.

Make a Counteroffer

Compare the insurance company's offer with your research and the third-party appraisal. If you still feel you are being lowballed, decide on an appropriate counteroffer and email your insurance provider with all the supporting documentation.

Know Your Rights and Next Steps

If you believe you are not getting a reasonable offer, contact your agent, or in some states, the Office of Consumer Affairs, for guidance. Ask for a copy of the report the insurer used to determine your car's value. Negotiating with your insurer can often result in a higher settlement.

What if insurance wants to total my car but I want to keep it?

I wasn't able to find any information about how many auto insurance total losses happened last year, but I can provide the following information about what to do if your insurance company wants to total your car but you want to keep it:

If your car has been damaged and your insurance company deems it a total loss, you might want to keep it instead of accepting their payout. This could be because you feel attached to the car, want to repair it yourself, or intend to sell it for parts. Here are some important things to consider and steps to take in this situation:

• Understand the Total Loss Process: Familiarize yourself with how insurance companies determine total losses. They typically declare a vehicle totaled when the cost of repairs exceeds a certain threshold, often expressed as a percentage of the car's pre-accident value. This threshold varies by state and insurer.
• Review Your Policy: Carefully read through your insurance policy to understand the terms and conditions regarding total losses. Look for any clauses that might support your case for keeping the vehicle.
• Negotiate with the Insurance Company: Contact your insurance provider and express your desire to keep the car. They may be open to negotiating a settlement that allows you to retain ownership. In some cases, they might offer you a lower payout, reflecting the salvage value of the vehicle.
• Provide Supporting Evidence: If you believe your vehicle can be repaired or have plans for its use, gather and present evidence to back up your case. This could include repair estimates from reputable mechanics or body shops, or documentation showing the potential value of the vehicle as parts.
• Understand Title Branding: When an insurance company totals a vehicle, they typically take ownership of it and sell it for salvage. Your state's Department of Motor Vehicles (DMV) will then brand the title as "salvage," indicating that the car has been severely damaged and repaired. This branding can impact the car's value and future insurability.
• Consider Repair and Registration Challenges: Repairing a totaled vehicle can be challenging and expensive. Ensure you understand the extent of the damage and have realistic repair plans. Also, note that registering a salvage vehicle can vary depending on your state, and some states may have strict requirements for inspections and documentation before allowing the car back on the road.
• Seek Legal Advice: If you strongly believe that your insurance company is not treating your case fairly, consider consulting an attorney specializing in insurance law. They can review your case and provide guidance on your rights and options.

Remember, keeping a totaled vehicle might impact your ability to insure it fully in the future, and potential buyers may view it as a higher risk. Carefully weigh your options, consider the financial implications, and make a decision that aligns with your circumstances and preferences.

What happens to the title of a totaled car?

If your car is declared a total loss by your insurance company, you will need to transfer the title of your vehicle to them. This is because they will pay you the fair market value for your car, essentially buying the car from you. Once you agree on the fair market value, you will need to sign the title of the car over to them as the seller, and they will sign it as the buyer.

However, you do have the right to keep a car that is considered a total loss. If you choose to do this, the insurance total loss payout will be reduced by the car's salvage value. The car will also likely have a salvage or branded title, which can make it challenging to get insurance for the vehicle or sell it.

Frequently asked questions