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In the insurance industry, a car is considered a total loss if the cost of the insurer to repair the damage equals 65% -75% of the cost of the vehicle. In this sense, you must decide if you want to continue and get the insurance check for a replacement, use the money to repair the damage or accept the claim of total loss, with an arbitrator.
What exactly is the total loss?
After an accident, a car will be considered a total loss or a repairable claim. As I have already mentioned, the total loss of a vehicle means that it is not worth repairing, since the cost exceeds its value. It could also mean that it is simply too damaged and cannot be repaired.
Determination of a total loss
After an accident, the declaration of total loss of the vehicle will depend on the insurer. Some companies thus declare a vehicle if the repair cost is as low as 51% of the actual cash value of the vehicle, while other companies wait until this percentage is greater than 80%.
Insurance representatives evaluate the car, and take into account different aspects of their condition, but there are some key questions that adjusters will ask to determine if a car should be considered a total loss:
- Can repairs be done safely?
- How close are the repair costs to the value of the car, or will the repairs exceed the value of the car?
What happens after the car is declared a total loss?
Basically, if you have car insurance, there will be two options. The first, if you want to be paid the value of the vehicle prior to the accident ( minus the deductible, if applicable ), the owner of the vehicle signs the title to the insurance company that paid the damages. Then, the insurance company owns the car and generally sells it or its parts at a car auction.
Or, if you can’t stop thinking about the long road trips and the fun adventures you had in your car and want to keep it, you will receive the pre-accident value less the rescue value. If you did this, the car would probably get a salvage title, depending on the age of the vehicle.
What if the airbags were activated?
There is a misconception that a car will automatically be considered total loss if airbags are activated ; This comes from the fact that the bags are expensive to replace. If you have an old old car and air bags are deployed, it is possible that the car may be declared a total loss.
However, if your car is new and there are not many other damages, there is a possibility that it may be repaired. Actually, it all depends on the age of the vehicle and repair costs.
If you disagree with the statement of total loss of the vehicle and your insurance policy has a valuation provision, you can hire an external arbitrator to examine the vehicle and estimate the cost of repair. This may be the best option if your vehicle has sentimental value, or if you think the insurer’s offer for a replacement vehicle is too low.
Once a car is declared a total loss, the most common option is to take the insurance check from the insurer to replace the lost vehicle. Your settlement check will include the registration tax and title fees for a vehicle of similar value. If the amount of money is enough to buy the car you need, this may be your best option.
Repair of your vehicle
If you have a good relationship with a machine shop or you can fix the vehicle yourself, consider using the check clause to repair your shattered vehicle. This is your best option if you disagree with the statement of total loss, but do not want to fight the insurer to reverse the designation of the loss. Keep in mind that you will greatly reduce the value of your vehicle in the eyes of the insurer, but you will be able to maintain your vehicle.