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What happens when your car is totaled?

In life, there are unfortunate situations that happen when you expect the least. One of these situations is without the doubt having a serious car accident that has majorly damaged your car. Thank God you are OK and now you have to think about the car.

If you have faced any serious car accident in life, you must be aware of the term of “totaled car”. With your car insurance policy, it is possible to get the coverage for your totaled car.

What to do if my car is totaled in an accident?

The first thing you need to do after having a serious accident is a meeting with your insurance agent. He will be able to tell you if your car is a total wreck or if it is going to be repaired. Usually, you don't have a word in this because it depends on calculations that take into consideration the current value of the car and the cost of the repairing operations.

How much insurance pays for totaled car?

If your car is classified by the insurance company as totaled, you will receive its current value, minus the deductibles agreed in the contract. In most cases, the insurance company takes over the wreck and it tries to sell it in order to recover a part of the money, but know that there are cases when you get the wreck and decide what to do with it.

When is a car considered totalled?

Your car insurance company may declare your damaged car as a total loss with following clauses:

  • If the car is quite impossible to repair safely.
  • If the repairing cost exceeds the actual cost of your car.
  • Another most important part is the laws of your state that depends mostly on the amount of the car damage. In some states there also the total loss formula which is based on the repairing cost and the scrap value that must be more than the exact value of the car. The cost varies from 50% to 100% according to the laws of the state.

How does the claim adjuster decide how much my car is worth?

The totaled car is similar to the total loss of a car. If one has been in a serious type of auto accident and car declared as “totaled”, that means the car is not at all repairable or it may cost much more than its original price. Different states have different laws and rules to define a totaled car by certain thresholds.

Some states have a Total Loss Threshold (TLT), in other states is calculated by "total loss formula" (TLF):

Cost of Repair + Salvage Value > Actual Cash Value
Alabama 75% Montana TLF
Alaska TLF Nebraska 75%
Arizona TLF Nevada 65%
Arkansas 70% New Hampshire 75%
California TLF New Jersey TLF
Colorado 100% New Mexico TLF
Connecticut TLF New York 75%
Delaware TLF North Carolina 75%
Florida 80% North Dakota 75%
Georgia TLF Ohio TLF
Hawaii TLF Oklahoma 60%
Idaho TLF Oregon 80%
Illinois TLF Pennsylvania TLF
Indiana 70% Rhode Island TLF
Iowa 50% South Carolina 75%
Kansas 75% South Dakota TLF
Kentucky 75% Tennessee 75%
Louisiana 75% Texas 100%
Maine TLF Utah TLF
Maryland 75% Vermont TLF
Massachusetts TLF Virginia 75%
Michigan 75% Washington TLF
Minnesota 70% West Virginia 75%
Mississippi TLF Wisconsin 70%
Missouri 80% Wyoming 75%

When you and the insurer disagree on your car's value

But what if you don't want the insurance company to get the wreck? You can discuss this possibility with one of their people and probably you can agree on some terms. If not, there is always the chance of participating in the auction and bidding for it, but you can imagine that the chances of getting it back are not very high.

Will the insurance company buy me a new car?

Well, the answer is yes but that depends on some major points to consider. If the car is new(age is less than 3 months), most of the car insurance companies reinstate it with a brand new car.

Some of the insurance agencies also provide the complete replacement coverage with a guarantee but at some additional cost. but if you don’t have signed for this type of coverage your agency will help you to “make your whole” according to your policy. According to that, the company will pay the exact cash value of your car before the declaration of “totaled”.

You insurance partner will pay only the value of the car, not your loan. For such reasons, some of the car owners go for the gap insurance to the car insurance coverage that may pay your dues to the money lenders.

Can I keep my car to repair it?

Yes, one can keep the car if the state law permits them to do that, otherwise, the car will be auctioned by the insurance company at the salvage yard. But if your state law allows, the company will receive the bids for your car from the salvage buyers and will set a fair value for the car. They will deduct a certain value from the final price settlement.

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