Eight questions to ask when your car is totaled

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There's about a one in five chance that a car involved in a serious accident will be declared a total loss, meaning it'll cost more to repair than it’s worth. If your car is totaled, it may seem like the aftermath is worse than the accident itself.

Because cars depreciate so quickly in value, the money that the owner gets from his auto insurance company covers only what the car is worth at the time of the accident, which usually isn’t enough to buy a similar car. “It’s difficult to be made whole when your car is totaled,” says Carroll Lachnit, features editor at Edmunds.com.

Before you start panicking about not being able to afford a replacement car, here are eight questions to ask when your car is totaled.

1. How is it determined whether my car is totaled?

An insurance claims adjuster will come up with the actual cash value, or pre-crash value, of the car, Lachnit says. It will be based on mileage, condition, standard features, extras on the car such as a sunroof, and where you live. Sales tax, title and registration fees also will be included in the actual cash value.

auto insurance totaled car

In an example at Progressive.com, a car with a cash value of $10,000 that requires $3,000 in repairs is not a total loss because it costs less than the actual cash value to repair it. But a car with an actual cash value of $3,000 that needs $4,000 in repairs will be declared a total loss because it costs $1,000 more to fix it.

If repair costs approach 50 percent of a car’s value, that’s typically the threshold for when a car will be totaled, Lachnit says. Some appraisers aim for 80 percent.

2. How much money will I get?

If the car is determined to be a total loss, you’ll get the actual cash value, minus your insurance deductible.

3. Will I get paid if I’m still making car payments?

Not at first. Since you don’t technically own the car if it’s not paid off, your lender will be paid first and you’ll get any balance. If the car is worth less than you owe, you still have to pay the loan off.

In this case, you can be financially rescued if you've already got GAP insurance. GAP, which stands for guaranteed auto protection, pays the difference between what the auto insurance company says the wrecked car is worth and what the driver owes on his auto loan. This applies only if the auto insurer decides that your car has been totaled.

4. How quickly will I get paid?

If liability is clear and not much is investigation is needed, you should get a check in a few days, says Kip Diggs, a spokesman for State Farm Insurance. If liability is unclear, it can take longer.

5. Am I covered for a rental car?

A week’s car rental is typical after an accident, but check with your insurance agent -- before you get in an accident -- to see how long you'd be covered if your car is totaled.

6. Can I keep my totaled car?

Probably, but it’s not a good idea. No matter how much you love your car, keeping a totaled car that can’t be fixed can create hassles with trying to drive it or sell it. By law, the car must be branded as “totaled,” meaning that any new owner must be made aware of that fact on the car title.

Someone may want to keep a totaled car if he has bad credit and may find it difficult to buy a new one, Diggs says. Some insurance companies may require that the car be sent to a salvage yard, where it will be sold for its parts. If the owner keeps the totaled car, the auto insurance company may deduct the amount it expected to get from selling the car to a salvage yard.

7. What if I disagree with the assessment?

If you don’t think the car is a total loss, you can have it repaired by whoever you want, Diggs says, or have a mechanic or someone else inspect it to determine how much it would cost to fix. You also should provide documentation about why you think your car is worth more and should get your own assessment of its value.

Diggs says that if you're a State Farm policyholder and you disagree with the value set through NADAguides.com, the insurance company will go to independent sources such as used car dealers and classified ads to determine a price.

“We’ll continue to work to satisfy them the best we can,” Diggs says.

8. What are my chances of having a wrecked car totaled by my insurance company?

About 20 percent of the estimates that State Farm writes for damaged vehicles are classified as totaled, Diggs says. Progressive puts the number at 17 percent.

  • Jimminy said

    Keep in mind the insurance company will do everything in their power to pay you as little as possible, even your own insurance company. They'll hire a so called third party, at least one that is owned by a private equity firm that invests committed capital from insurance companies. They insist on paying you wholesale. Why would they bite the hand that possibly might feed them? Dealers make more money if they can finance you than if they sell you a car outright, so keep that in mind when some insurance company says they have a check for a pittance amount since dealers like cash (which isn't true at all).

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