What Is the Value of a Car if It Has Been Deemed Totaled By the Insurance Company?
You have many decisions to make when your vehicle is declared a total loss by your insurance company. Allowing your company to take away the vehicle will get you a larger settlement with less hassle but you will lose your car. Retaining a drivable vehicle will keep you on the road but only after repairs and state inspections. Additionally, you are unlikely to sell your total loss vehicle for as much as you would have before the accident. Total loss claims can be overwhelming so you should know some basic information in order to navigate through these claims successfully.
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Definition
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When your vehicle sustains damage that will cost more to repair than the vehicle's value it becomes a total loss. The term is purely economic and has nothing to do with how badly damaged your vehicle is. If you are driving an older car with a small resale value it can become a total loss with nothing more than cosmetic damage. Once this happens your car is legally a pile of scrap and must be retired or put through safety inspections and re-registration to be driven again.
Salvage Value
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Your insurance company will attach a salvage value to your car. If it buys the wrecked car from you it will sell it to a salvage company or auctioneer once your claim is settled. The amount of money the insurance company receives for the car in its damaged condition is the salvage value. Salvage value is always considerably less than the retail value of the same car with no damage.
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Salvage Title
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Sometimes your total loss vehicle is repaired and driven again, either because it was sold at auction after your claim or because you kept the car and repaired it. Either way, the vehicle will carry a salvage title forever as a record of the total loss claim. Vehicles with salvage titles often sell for less money than the same cars without salvage titles.
Salvage Appraisals
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One way to determine an approximate resale value of your repaired vehicle with a salvage title is to hire a salvage appraiser. He will consider a number of factors such as the age and condition of the vehicle, the type and location of the damage, the normal resale value without damage and the economic condition of the area in which it is located. The salvage title may have no effect on your car's value if the car is old and basic, but more likely the value will be reduced from 10 to 50 percent.
Market Value
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Ultimately, the vehicle is worth whatever another person is willing to pay you for it. If you choose to drive your totaled vehicle until it clocks its last mile, the car lost no value to you after the accident. There is no set rule or formula to determine a salvage title's effect on value. Keep in mind that lenders will not typically finance a salvaged vehicle, so the price you charge must be affordable to the buyer without taking a loan.
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References
- Photo Credit Wreck image by Mads Blumensaat from Fotolia.com
