Does the insurance just decide your car is totaled and that’s it? Can you appeal? What are the consequences of having a car being declared totaled?
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Imagine you have a car that gets in a really bad wreck. For 90% of what a new one would cost, you can restore this car to its original condition. For a lot of insurance companies, they decide that math doesn’t make sense and instead of fixing the car, they give you the money towards getting a new one and or paying of the debt of the current one.
Totaled does not mean destroyed. It just means that the cost of repair is greater than the present resale (wholesale) value of the car. The car might very well be repairable, but unless you have paid for a full replacement value (which is very expensive insurance), you are only covered to the value of the car. And…contrary to what people think, it does not mean that you will be able to buy a replacement vehicle for the insurance amount. You can appeal to the insurance company, but you are only entitled to the insurance you paid for…which is the value they probably have already quoted you. That’s why at some point, it doesn’t make sense to carry comprehensive insurance on an older car.
From an Australian insurance perspective, when we talk about a car being totalled, it’s considered a “write-off” (note: I did work in the industry, though that was nearly 20 years ago now, but I imagine the definitions hold up). There are two kinds of write-offs:
* Statutory write-off: the car has sustained damage that makes it unsafe to drive even if repaired; generally chassis damage or something like that.
* Economic write-off: the car has sustained damage that makes repairing it not cost-effective, which usually means that the repair cost is equal to or greater than the insured amount (ie. you insure a car for $5000 and the repairs would cost $6000; it’s an economic write-off as it’s just cheaper to pay you out the $5000)
I believe the insurance company I worked for was typical in that part of the policy agreement was that in the case of a write-off, the insurance company would gain the rights to the wreckage. As such, if you decide “no, I’d rather repair the car even if it’s an economic write-off” the company would pay you the insured amount, minus how much the wreckage would likely have sold for (they had a wrecker they worked closely with that would estimate the salvage cost). Then it’d be up to you to organise the repairs yourself.
It means always get fucking gap insurance if you have a car note. Going through this currently from a drunk driver who took out my back end including the entire damn wheel.
An adjuster will come and look at your vehicle and appraise the damage. If you have damage that’s more significant than the actual value of the car or if it’s more than 75% of the value insurance will total it out. My car was worth a little over 10k and had over 9k in damages so it was totaled. They’ll then write you a check for the value of your car and then they own it and can do whatever they want with it, after you fill out copious amounts of paperwork that is. If you appeal that decision you’re not getting any money and now you have to figure out what you’re gonna do with that car (my city will fine you for having it in your yard)
A car being totaled means the damage exceeds the car’s value.
You can either receive a check for the car’s value before the accident and use that to buy a new car, or get a che k for the car’s value before the accident minus the value of the scrap heap you’re left with and get the car repaired out of your own pocket.
If you choose the second option, the insurance company will no longer pay out damages for that car because it has already cost them more than the car is worth.
You are insuring your car for its market value (where market value is determined by the insurance company, more or less). The insurance company will not pay you more than that amount to repair damages – thus if cost to repair car exceeds market value they take your car (and sell it to a junk yard, typically) and give you a check for market value. A real killer in this is airbags which are quite expensive to replace – they are one time use only, of course and if you’re in an accident where one or two deploy that right there by itself can be a significant chunk of the car’s market value unless the car is less than a few years old.
When a car is totaled, it’s means the cost to repair is above a percentage of value or it’s not repairable. You can appeal, or verify information, but the insurance company has last word. You also might be able to buy back the totaled vehicle, but that means they won’t repair it and it will receive a branded/rebuilt title.
When a vehicle is declared totaled, if you have collision or other applicable coverage, they will pay you the replacement cost of the vehicle (same year and trim) plus sales tax and fees. I had a vehicle totaled out last year… seemed like a relatively minor fender bender, but because my car was 12 years old the $5000+ cost to repair was above the cutoff. They paid me like $7000 value plus $1600 for tax and fees. I put that toward a new car.
Don’t forget when your car is totaled to use an independent adjuster as they can dispute the value being offered for your car.
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