Determining Whether a Car is Totalled
When an insurance company declares a car totalled, they have determined that it is not economical to repair the vehicle. The total loss process begins when the insurer is notified of a car accident and the insurer dispatches an adjuster to assess the damage. The adjuster estimates the cost of repairs to the car, along with the value of the vehicle. Then, the insurer decides whether the damage makes the car unrepairable and therefore a total loss.
When a Car is Totalled
If an insurer declares that a car is totalled, the insurer pays an agreed amount to the policyholder reflecting the pre-accident market value of the car. The cost of the car is determined by factors such as the car’s age, condition, and average market value for that specific make and model. In many cases, the total loss value does not adequately accounts for certain items, like any aftermarket parts, or gadgets added after the car was purchased.
How to Maximize Your Claim when Your Car is Totalled
When a car is totalled, it is in the insurer’s best interest to pay out as little as possible. Therefore, policyholders are advised to gather whatever evidence they can to maximize their settlement amount. This includes photographs of the car’s condition prior to the accident, market value estimates of the car, recorded conversations with the insurer, and any receipts of parts or accessories. Taking the car to a third-party mechanic to provide an estimate of the cost of repairs is inadvisable, as it may indicate that the cost of repairs will be higher than the cost of the car.
Recovering Possessions from a Totaled Vehicle
Once a car is declared a total loss, the insurer usually allows the policyholder to keep the car for 24 hours. This provides the policyholder with the opportunity to recochet personal items from the car. While removing possessions from the car, policyholders are advised to be mindful of their actions, as any damages caused by removing the items may result in a deduction from the settlement amount.
What Happens to the Car?
Once a car is totalled, the insurer takes possession of it and assigns an aftermarket value to any parts or accessories still on the car. Pieces such as tires and windshields that are working and in good condition may be sold for a fair price. The rest of the car is sold in pieces for scrap metal, resulting in a low settlement amount for the policyholder.
Gap Insurance
Gap insurance can be a valuable lifeline for policyholders who no longer receive a car loan after their vehicle is totalled. Gap insurance pays any remaining balance left over from the loan in the event of an accident where the vehicle is declared a total loss. This insurance option is especially valuable to policyholders who owe more than the vehicle is worth.
Replacement Costs
Another option an insurer offers after a vehicle is totalled is replacement costs. In some cases, the policyholder may be eligible to have the insurer pay for another car with similar features as the previous car. This replaces the main features of the previous car with a newer version.
Revaluing the Cost of a Totalled Vehicle
In some cases, policyholders believe that their insurer has undervalued the pre-accident market value of a car. Policyholders can contest this by engaging an independent appraiser to reevaluate the car’s value. If the appraiser’s value exceeds the total loss value by enough, the policyholder may be eligible to receive an increased settlement amount.
Conclusion of Liability
When an insurance company totals a car, the insurer is usually done with the process. This means that the insurer no longer is responsible for any damage or liability related to the car after the point when the insurer declared the car a total loss.
Implications of Totalling a Car
When a car is totalled, policyholders are liable for any damage to their car that occurs after the insurer declares it totalled. Additionally, policyholders must be aware of the cars they purchase to replace their totalled vehicle. Oftentimes, replacing a totaled car with a newer or different model may result in higher insurance costs.
Insurance Regulations on Totalling a Car
In most cases, states require an insurer to honor a total loss, meaning that the insurer pays the policyholder the pre-accident market value of the car. In some cases, the insurer may petition the judge to receive a lesser amount. In the event of this, the policyholder deep be represent by an attorney.
Additional Coverage for Totalled Cars
When an insurance company totals a car, the policyholder can receive additional coverage for replacement parts and repairs under certain insurers. Certain insurers offer rideshare coverage, which provides protection when a policyholder is using their car to work as an Uber or Lyft driver. This coverage is especially helpful to policyholders who have their car declared a total loss while using their car for ridesharing services.
Payouts After Totalling a Car
When a car is declared a total loss, the insurer pays the policyholder the pre-accident market value of the car in an agreed upon amount. This allows policyholders to use the settlement amount to purchase another car if they choose. However, it is important to be mindful of the implications of buying a newer or different car, as it may result in higher insurance costs.
Tax Implications of Totalling a Car
If the pre-accident market value of a car exceeds the amount the policyholder paid for it, the policies may be subject to taxes for the difference in the amount. Policyholders must be aware of this and may consult with an accountant to properly determine their taxable amount.
Potential Liability After Totalling a Car
If a third-party is deemed liable for the accident that resulted in an insurer declaring a car a total loss, the policyholder can take legal action against that third-party. Generally, this involves filing a lawsuit against the liable party in order to recover costs. Still, policyholders must be aware of the time limits and statutes of limitations they must be adhere to in the process.
Implications of Declaring a Vehicle a Total Loss
Declaring a car a total loss has implications beyond just the monetary settlements provided by insurers. It also affects the policyholder’s driving records and licenses, as sometimes insurers may deem policyholders at-fault in the accident. Depending on the severity of the accident, policyholders may face punishments such as deductions to their insurance premiums, driver’s license suspensions, and even criminal charges.
