Understanding Your Options for a Totaled Car

Learn how to talk with your claim adjuster about a total loss

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Coping with the aftermath of a serious accident can be very stressful, especially when trying to deal with your insurance company and the loss of your vehicle. However, knowing the right questions to ask, and having a realistic understanding of the situation, can be very helpful. Here's what you're likely to face if your car has been totaled in an accident.

When is a damaged car considered a total loss?
Your insurance company may decide your damaged car is a total loss if:

1. It cannot be repaired safely
2. It would cost more to repair the car than it's worth, or
3. State laws require the company to call it a total loss due to the amount of damage

How does the claim adjuster decide how much my car is worth?
Your adjuster will make note of your mileage, the condition of the body, interior and tires, and any additional parts or equipment you've added. (Receipts are always helpful.) Based on the pre-accident condition of your car, your adjuster will find similar models that are for sale in your area and will base the total loss estimate on these comparable cars. This is called the Actual Cash Value of your car.

Ask your adjuster for the details of the specific cars that are for sale or were recently sold. If you feel that your car is worth more, explain why—or try to find a car for sale that's a better match to your car.

Will the insurance company buy me a new car?
Probably not. Sadly, a new car loses some of its value as soon as you drive it home. But, some companies offer Guaranteed Replacement Cost coverage for newer cars, so you don't have to worry about how much you'll be paid—it will cover a new car. If you don't have this coverage, your company is required to "make you whole," as defined in your policy. This means your company will pay you the actual cash value of the car, minus the deductible for the collision coverage on your policy.

Ask your adjuster to explain the details of the total loss worksheet, so that you understand the full calculation, including how the deductible is subtracted from the total. Your payment should be enough to buy a car that's comparable to your old one.

How soon will I get a check?
Most companies will issue payment within a few days of finalizing the actual cash value. If you leased the car, payment goes directly to the leasing company. If you financed the car, the pay-off amount goes to the finance company or bank—and you get the rest. Of course, if you owned the car yourself, you get the full check.

Ask your adjuster when you can expect payment—and, if your company had given you a temporary rental car, ask how long you'll be allowed to keep it. Your adjuster should give you a reasonable amount of time to find a new car.

Can I keep my car and repair it myself?
Usually a damaged car is auctioned at a salvage yard and the insurance company keeps the proceeds of this sale. If you want to keep your damaged car, and it's permitted by state law, your company will get bids from salvage buyers to set the fair market value on the salvage—and will deduct this amount from your settlement. Many states require the title to be changed to a "salvage title" which means you will not be able to register for plates until you complete the repairs and apply for a new title.

Ask your adjuster about the salvage laws in your state, and then decide if it makes sense to keep your car and repair it. While your company may call it a total loss, it may be priceless to you!

This explanation is intended only as a guideline. Your company will provide detailed information about its claims procedures.

Looking for different information? Have questions or feedback? Please let us know.

Originally posted September 17, 2004.

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