What Does it Take for a Car to Be Totaled?

You just crashed your car. No one was hurt, but your car is a mess. True or false, your insurance company will pay the cost of your repairs? The answer is maybe.

Totaling Your Car

Your insurance company has the option to pay for repairs or declare your car a total loss. You car is totaled when the estimated repair costs are higher than the actual cash value (ACV) of the car. In that scenario, the insurance company will pay you the ACV of your car. In either case, it will subtract the amount of your deductible from the payout.

Determining Actual Cash Value

Insurance companies purchase third-party software that is used to determine a car's actual cash value. Usually the value assigned is comparable to the trade-in value at a dealership. Do your own research. If you disagree with the assessed value, be prepared to tell the company why and show documentation.

Preventing Your Car From Being Totaled

The time to prevent your car from being totaled is not after an accident, but when you shop for auto insurance. Some insurers total cars at only 51 percent of their value, while others go as high as 80 percent. Some states regulate this percentage, and others do not.
Ask questions. If an insurance company offers bottom-line rates or speedy settlements, there may be a reason.

Keeping a Totaled Car

A totaled car is not necessarily an undrivable mass of tangled steel and broken glass. It may be a perfectly safe, mechanically sound nine-year old car that was left out in a hail storm. If the cost of repairing the dents is greater than the value of the car, your insurance company will still total it.
Usually your insurance company will allow you two options:
1) Accept payment for the value of the car, less your deductible, and surrender the car. Once the car is surrendered, the insurance company typically auctions it or sells it to a scrap dealer.
2) Accept a lower payment for the value of the car, less your deductible, and keep the car.
You have several options if you choose to keep the car.
1) Pocket the money, and continue driving your dented vehicle for years to come.
2) Sell your car off in parts.
3) Donate the car to a charity. Your car would likely become a class project for an auto body school and then be passed on to someone in need.
4) Trade in your car as down payment on another car.

Re-insuring a Totaled Car

As long as your car passes a Department of Motor Vehicles inspection, purchasing liability insurance should not be difficult. Purchasing additional collision insurance, however, may be difficult or impossible.