If your car is severely damaged in an accident or natural disaster, the insurance company may declare it a total loss. This means the cost of repairing the vehicle exceeds its actual cash value (ACV). When this occurs, you have several options to consider.
Understanding Total Loss
Insurance companies use specific criteria to determine if a car is a total loss. This typically involves comparing the repair costs to the vehicle’s ACV. If the repairs exceed a certain percentage of the car’s value, usually around 70-80%, the insurer will likely declare it a total loss.
The ACV is based on factors such as the car’s make, model, year, mileage, and condition before the incident. Insurance companies use resources like Kelley Blue Book and NADA Guides to assess the pre-accident value.
Your Options with a Totaled Car
When your car is deemed a total loss, you have a few choices:
Accept the insurance settlement: The insurer will offer you a payment equal to the car’s ACV, minus your deductible. You can use this money to purchase a replacement vehicle.
Keep the car and retain the salvage: In some cases, you may be able to keep the totaled car and receive a reduced settlement amount based on the vehicle’s salvage value. You would then be responsible for having it repaired and re-registered.
Sell the car to a junkyard or salvage yard: If you don’t want to keep the car, you can sell it to a junkyard or salvage yard. They will typically offer you a price based on the car’s condition and the value of its parts.
Donate the car to charity: Some charitable organizations accept donated vehicles, even if they are not in running condition. You may be able to claim a tax deduction for the donation.
If you disagree with the insurance company’s valuation of your totaled car, you can negotiate or request a second appraisal. Providing documentation such as maintenance records and recent sales of similar vehicles in your area can help support your case.
In the event that your car is totaled, it’s important to prioritize your safety and well-being. Once you have addressed any immediate concerns, you can focus on the next steps in dealing with your totaled vehicle and getting back on the road.