How to handle your insurance company after totaling your car
If you’ve been in a major car crash, your insurance company might decide that it’s not worthwhile to repair your vehicle and declare it totaled instead. If you’ve never had a car declared totaled before, this can be a confusing process to deal with.
Learn what steps come next and what your options are when your insurer declares your vehicle a total loss.
Deciding Your Car Is A Total Loss
A totaled car is defined by your automotive insurer. Sure, you and your mechanic can discuss the severity of damage and decide whether the costs exceed the value. However, insurance companies use formulas to calculate if a car truly is a total loss.
To determine if a car is totaled or not, insurers compare the estimated cost of repairs to the value of the vehicle. Depending on where you live, the ratio that decides a car’s total loss status varies. For instance, in New York, if repairs are estimated to be more than 75 percent of the car’s value, then it is a total loss. However, this car would only be deemed totaled at 100 percent of the car’s value in Texas.
Thus, it is difficult to say confidently if your car is totaled without first getting it appraised by your insurance company. Moreover, these values can vary by insurer depending on their methods of valuation. This is because appraisers (such as junk yards that buy cars) must determine both the actual cash value of the car before the accident as well as estimate the repairs. Both can result in variable amounts depending on the numerous factors used to evaluate the car.
Your car may be totaled even if you think the damage is only superficial. It is up to your insurer to calculate and decide when you reach that point.
Your Insurance Company Will Buy Your Totaled Car Off Of You
After concluding that your severely damaged vehicle is totaled, your insurer will most likely offer to buy it from you. Under collision or comprehensive coverage, your insurance company will write you a check for the determined actual value of the car (the pre-accident value) minus your deductible and any other related fees. The insurance company will then sell the car at an auction to salvage yards.
If you own the car, the entire check will go to you. However, if the car is leased, the check will go to your leasing company. Likewise, the check will go to your financing company if you took out an auto loan.
Accepting the insurance settlement makes it simple and easy to get rid of your damaged vehicle and obtain a down payment for your next vehicle. However, it may not be the best solution financially. This is because your auto insurer might not be giving you the best price for your car, even if it is totaled. Additionally, your deductible can significantly reduce your final check.
The good news is that you can forego selling the vehicle to your insurer. Instead, you can sell it to a third-party and possibly make a greater profit than if you were to sell to your insurer.
You May Be Able To Keep Your Totaled Vehicle
Even if your insurance company deems your car as totaled, you can still keep it in some cases. If your insurance company has decided to total your vehicle, by default they will give you a check. However, you can request to buy your car back from them and still get paid for your vehicle.
Depending on your insurance company’s policy and what state you live in, you can request to buy back your totaled car. In this scenario, you will get your vehicle’s title with a salvage branding as well as a check for the pre-accident value of this car, this time minus both your deductible and the amount they expected to make at auction for your vehicle.
For instance, if your car’s pre-accident value was $7,000, your insurance company expected to make $1,500 setting your salvage vehicle and your deductible is $1,500, $3,000 will be subtracted from your check and you will receive $4,000 instead.
This may seem like a loss, but once you get the title and your vehicle back, you can find a new buyer for your salvage car. In some cases, you can get more money choosing this tactic!
Your insurance company specializes in insuring vehicles, not selling totaled cars, which means they don’t always get the best price possible. Therefore, it can be possible to find someone else willing to pay a better price for your totaled car. You can walk away with two checks and more money in your pocket!
