Your Totaled Car: Everything You Need To Know
Driving in a snowstorm last Christmas, my wife was greeted by a fishtailing car that careened into her lane and did quite a bit of damage to her vehicle. The car was a Volkswagen Jetta with about eight years of history behind it. She was fine as was our then-unborn baby, but I knew when I went to pick her up from the accident that the car was toast.
It wasn’t that the car couldn’t be repaired. There was just significant body damage, and the overall value of the car had fallen too much in a decade to be “fixable” in the eyes of our insurance company.
Thus began the process of dealing with our first totaled car. Thankfully, the process wasn’t as bad as it sounds. To get through it smoothly, however, it helps to know what you can expect. First of all:
When Will My Car Be Considered ‘Totaled’?
There are three probabilities for having a totaled car.
One: There is no way that the car can be repaired and made ready for the road in a safe manner.
Two: The car can be repaired, but the cost for doing so would be more than the car is worth, such as in the case illustrated above.
Three: Through conditions set by state law, the car’s repair costs and its scrap value fail to meet or exceed a percentage of the car’s total value. This is called the Total Loss Formula, and the percentage requirement can be anywhere from 50 to 100 percent. So, for example, if your car is worth $10,000 but your state says the car is totaled after 50 percent, then you would have to accept the settlement so long as the repairs plus scrap value are over $5,000 combined.
How Car Value Is Determined
Your first instinct when determining the car’s overall value might be to march over to the Kelley Blue Book website and run a rough estimate on your specific make and model. Don’t put a lot of stock in whatever you come up with. From the adjuster’s point of view, the overall value will entail collecting your mileage, body condition, interior and tires, and any add-ons you may have made. You can influence the outcome by holding on to any receipts that reflect such improvements.
The adjuster will check the pre-accident condition of the car and weight that against similar models for sale in the region. He’ll base his estimate on comparable automobiles. Utilizing this method, it’s clear whatever KBB spits out would be much different from the Actual Cash Value (ACV). That’s why car value is best left to your adjuster.
After the ACV of your car is determined, your insurance company will either communicate with the other party’s insurance company to reach a final settlement, or they will simply cut you a check if no other parties were at fault. In our case, the process took around one week to complete, from the collection of info to the receipt of payment.
While we could have held on to the car had we wanted, that would have entailed getting preliminary bids on the salvage value of the car, which would have been drawn out of the final settlement. Ultimately, when body damage is severe, it’s hard to justify keeping the car as it never drives the same. Plus, in our case, the higher settlement check enabled us to pay off our credit cards and take on a new car payment for less than $300 per month.
While a totaled car is inconvenient and not something anyone desires — especially when the car is paid for — an insurance company can speed up the process and relieve any and all headaches that come about as a result. If you’ve been in an accident and your car is totaled, make sure you get your version of events down as soon as possible and exchange insurance information with the other involved party. Also, get a copy of the police report to your insurer as soon as you can. All these steps will help your adjuster do his job, so you can be back on the road in no time.