Vehicle Accidents and Total Loss

Most car accidents are minor with damages that can be repaired. However, in some cases, the vehicle may end up being totaled.

Below are some frequently asked questions that may aid in a better understanding of total loss accidents.

◈ What is total loss and how is it determined?

The term “total loss” refers to cases where the cost of repairing the damaged vehicle is higher than the car’s actual cash value.

You may think that a vehicle is declared totaled when it is severely damaged and unable to drive. However, it is more of the value of the car rather than the extent of damage.

For example, a 2015 Buick and 2021 Buick occurred the same amount of damage.  There is a higher possibility that the 2015 model will be totaled since it has a lower value compared to the 2021 vehicle.

A claims adjuster looks up the actual cash value of the damaged vehicle on the insurance company’s data base.  It is then compared with the cost of repair to determine if it should be totaled.

Typically, insurance companies use the NADA (National Auto Dealers Association) or Kelley Blue Book and a secondary reference.

◈ What if you disagree with the insurance company’s payout or want to keep the totaled car?

 You can try to negotiate with the claims adjuster.  If you have done any recent maintenance, submit documentation showing proof the car is worth more than previously estimated. The adjuster will be able to refer to the documents to re-evaluate the value amount. You can also submit documents showing installation of custom parts or equipment to your insurance company.

Depending on the case, it may be possible to keep your totaled vehicle. In this case, the payout amount from the insurance company will be different from when you sign over your vehicle. You will receive the actual cash value minus the deductible and the salvage value.

If you wish to keep your vehicle, communicate with your adjuster on your options.  Keep in mind that the repair expenses, will be out of pocket.

◈ What happens to my totaled vehicle?

As mentioned earlier, in order for a vehicle to be determined as total loss, the cost to repair must be higher than the value of the vehicle. However, depending on carrier and state law, a vehicle is sometimes considered total loss when the damage amount exceeds a certain percentage of a car’s value.

Once the vehicle is declared as total loss, the insurance company pays out the actual cash value minus the deductible that you have selected on your insurance coverage.

The signed over vehicle will then be sent to a salvage auction.  Some cars will be refurbished but, in most cases, will be dismantled for parts.

◈ What if you want to buy a vehicle that has been totaled?

In most states, vehicles that have been determined as total loss are auctioned. The rules may vary but you will most likely need a salvage dealer or car dealer license to participate in these auctions.  So, if you’re planning to repurchase a totaled vehicle, it is important to check what the guidelines are and have a license in possession.

If you do repurchase a totaled vehicle, keep in mind that the whole repair cost will have to be out of pocket. Make sure that all necessary repairs are made because if it doesn’t pass the state inspection by the DMV, the insurance company may later decline coverage for a future accident.

In addition to passing the state inspection, you should also obtain Liability Insurance. Be aware that some insurance companies may not offer comprehensive or collision coverage for vehicles with salvaged titles.