Totaled cars claims present their own unique challenges and before you ever have to file one, here are some things you should know
If you are ever in a serious car accident where the damage to you car is extensive, you may be faced with the experience of having your insurance company declare your vehicle a total loss. Totaled cars claims are a unique breed of insurance claim and there are a few things you should know before you're faced with that unpleasant experience.
Determining a car is totaled
Whether or not your car is considered totaled after an accident depends on criteria determined by your insurance company. Whether or not your insurance company will even cover the cost of the damage depends on the cause of the damage as well as the type of policy you have in place at the time of an accident. It can also depend, in some cases, on the state where you live.
Totaled cars may fit into several different categories. In some cases, a car is considered totaled if the cost of repairing it is more than the cost of replacing it. In others, a car is considered totaled if it has received damage that is defined as dangerous under state law. Your insurer may also decide it wants to declare your car totaled if the repairs necessary to get the car back on the road and functioning properly exceed a threshold percentage of the car's value.
Determining value
If you make a totaled car claim, you will generally be awarded the current cash or Blue Book or what the insurance company will refer to as the actual cash value of the car minus your deductible. In most cases, the actual cash value of your car is determined by an adjuster assigned by your insurer to examine your car and work with your claims specialist to determine if the car is totaled and if so, what the payout will be.
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When deciding how much to pay out for these claims, insurers take some of the following factors into consideration:
- A mechanic's repair estimate
- The current list or Blue Book value of the vehicle
- The salvage value of the vehicle
- Any relevant state laws
One other consideration that insurance companies will make (though many won't tell you) is if you have additional coverage options they may have to pay for. For example, if you have a rental reimbursement feature on an applicable policy option (say collision or comprehensive), the insurance company will factor in how much they will have to pay for providing you a rental vehicle while your car is being repaired. While that cost has nothing directly to do with the cost of repairing your damaged car, your insurer will factor that in when determining whether it would cost them less to total your car than to pay for your rental car and for the repairs to your damaged vehicle.
Do you have the right coverage?
In order for your insurance provider to pay any totaled car claims, you need to have had the right type of coverage in place at the time of the accident. If your car is totaled due to a collision you caused, or if you hit an object or if you suffered a rollover accident, you will likely need to make a claim using your collision coverage insurance.
If another party hitting you totals your car, you will be filing your claim against the liability insurance the other driver should be carrying. If that other driver has a low limit on his or her liability policy and it is not enough to fully compensate you for the total loss of your vehicle, you may be able to make a supplemental claim if you have uninsured/underinsured motorists coverage in place on your policy.
If your car is totaled because of a flood or a fire, if a tree falls and crushes it in your driveway, or if vandals trash your car beyond repair, you would need to make your totaled car claim on your comprehensive car insurance coverage. (You would also need to have comprehensive coverage in place if you lose your car due to theft.)
Unhappy with the settlement amount?
After the adjuster and your insurer's claims manager offer you a final settlement for totaling your car, if you are unhappy with the payment on your claim, you should be able to challenge it. Refer to your insurance policy and look for something like an Appraisal Provision in the terms and conditions. Under this provision, you should be able to get your own appraisal of not only the cost to repair your car, but a counter figure for the actual cash value. If your appraiser comes up with a different (hopefully higher) total for your settlement, an arbiter will be brought in to resolve the difference.
Even if there is not a strong Appraisal Provision in your policy, you may be able to challenge any settlement value of your totaled car claim. If you think your insurer has undervalued your car, you can challenge the list value of your car. If you think the book value of your car is not accurate, you can use statements from your mechanic, the vehicle's service record and its mileage record to argue that your car is worth more.
Other coverage options that might help
If your insurer is only willing to give you the current cash value of your car, the totaled car claim payment may not be enough to buy a replacement. If you are concerned about this possibility, you may want to look for an add-on or even a different company that will offer you a vehicle replacement option. These features are becoming more and more popular among car insurance providers. With this type of option, you can actually buy the same make and model vehicle and depending on how long you've owned the car you totaled or how many miles you've put on it, some companies will even offer to replace it with a newer model.
Of course, vehicle replacement or full recovery options need to be in place on your coverage before you ever need to file a claim.
What if you still owe money on that totaled car?
If the car you are filing a totaled car claim for is a new or newer car and you took out a car loan to buy it, you may find yourself in an unenviable position. Since many cars depreciate more rapidly than your loan balance drops, you could actually find yourself owing more on the car than your actual claims settlement amounts to. Unless you have added a provision such as Guaranteed Auto/Asset Protection (GAP) car insurance coverage or some other loan/lease payoff feature to your policy, you could find yourself forking over the entire totaled cars claims settlement to your lender, still owe a balance, and be without any funds to start the process of obtaining a replacement vehicle.
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As with a vehicle replacement option, it will do you no good to try to add a GAP or loan/lease payoff option after the fact, so all of these factors should be seriously considered when you first put your car insurance package in place.
Some unique totaled cars claims circumstances
If you have an antique or classic or vintage car you unfortunately totaled, hopefully you have put in place coverage uniquely designed to handle a classic car. In these cases, it won't be the current market or actual cash value of the car that will be used to determine a settlement. Since most vintage cars actually appreciate in value (or at least hold steady value over time) you and your insurer will have set what's known as an agreed-upon value of your vintage car. You and your insurer would have employed several tools to determine the fair replacement value of your vintage car (factoring in any time and money you've invested in restoring it) and that will be the amount of your settlement check (minus any applicable deductible).
What happens to the totaled car?
In nearly all cases, after you and your insurer have agreed upon a settlement value for your car that was totaled, you will be asked to sign over the title of that car to your insurer. From there, your insurer will likely arrange to have whatever salvage value can be extracted from the car as a way to offset their losses for your claim.
Knowing that, some car owners will actually retain ownership of the car in exchange for a slight reduction in the claim, and then try to make up the difference by either salvaging the car themselves (i.e. sell parts to a local salvage yard) or even try to have the car repaired for future use. Be advised that there are varying state laws regarding the handling of a car any insurer has deemed a total loss and even stricter requirements about any potential attempt to sell a car that has been declared a total loss by an insurer.
Totaled cars claims are complicated and adding to that is the emotional stress that results in the aftermath of a serious accident. Knowing ahead of time all the provisions of your coverage that would apply in the event your car is totaled is important and your car insurance agent should inform you of these areas of coverage when you put your policy in place. If you currently don't have an agent or feel as though you may get better service from a new one, perhaps we can help. Reply! can put you in touch with car insurance professionals in your area who can help you understand all the ramifications and the options you have long before you ever have to make any claims.