Yes, a fender bender can total a car. A car is considered totaled when the cost to repair it is higher than the actual cash value of the car, which can be calculated by subtracting the vehicle’s depreciation from its original price. Basically the actual cash value of your car lets you know how much your car is worth after taking into account factors such as age, mileage, and cosmetic damage.
Although fender benders are usually considered small accidents, they can cause serious damage to your car. If you have an older vehicle model and a mechanic assesses the cost of repairs as being higher or equal to the actual cash value of the car, then your car will be declared a total loss by your insurance.
A car is considered totaled when the cost of repairing it plus its salvage value adds up to more than the vehicle was worth immediately before the damage occurred. A car may also be considered totaled if the cost of repairs exceeds a certain percentage of the vehicle's value, as dictated by state law.… read full answer
For instance, New York uses a total loss threshold (TLT) of 75%, meaning that a car must be totaled if its repair costs are 75% or more of its actual cash value. Total loss thresholds like the one used in New York leave a cushion for higher-than-estimated repair costs, given that damage is often more extensive than it initially appears. If the state doesn’t have a total loss threshold law, insurers will generally use the standard totaled car formula, which includes the salvage value.
How to Determine If a Car Is Totaled
Most States: A car is totaled if the cost of repairs plus the salvage value is greater than the actual cash value.
Total Loss Threshold States: A car is totaled if the cost of repairs is greater than a certain percentage of the vehicle’s actual cash value. Total loss thresholds are often 70%-80%, depending on the state.
Many states also allow the owner of the vehicle to declare the car a total loss at will. However, that is only for title purposes – you cannot call your vehicle a total loss for the sake of an insurance payout.
Factors That Affect Whether a Car Is Totaled
Insurance companies take a car’s repair costs, salvage value and actual cash value into account when deciding if it should be totaled, along with applicable state law.
Repair Costs: A vehicle’s repair costs vary depending on extent of the damage as well as the car’s make, model, and year. For instance, luxury cars and cars with specialty parts, like hybrids, are usually the most expensive to repair.
Salvage Value: A car’s salvage value is the amount that the vehicle is worth in its damaged state, such as for parts and scrap metal.
Actual Cash Value: A car’s actual cash value (ACV) is the amount the car would be worth if it hadn’t sustained the damage in question. Insurers determine ACV by comparing the car to similar vehicles in the area, accounting for factors such as mileage, condition, and extra parts. ACV is also important to drivers because insurers will pay them the car’s ACV if the vehicle is totaled in a covered scenario.
Finally, you can always ask your insurer if you don’t understand how they decided your car was totaled. And if you have evidence to support your claim, you can also argue that your car was worth more than the insurer estimated. For more information, check out WalletHub’s guide to totaled cars.
You can fight an insurance company over a totaled car’s value by sending the insurer a counteroffer along with evidence justifying your car’s value. If the insurance company does not raise its offer, you can contact your state’s insurance regulator, seek arbitration or file a lawsuit.
Receive a settlement offer from the insurance company.
Gather evidence, including an independent appraisal, the car’s sticker details, prices for comparable vehicles, photos of the car before the accident, and receipts for any features you added.
Send this evidence and a counteroffer to the insurance company.
If the insurance company does not agree to your counteroffer, contact your state’s insurance regulator to request help.
Ask your insurance company for third-party arbitration if necessary.
File a lawsuit as a last resort.
It’s important to remember that insurance companies are only required to pay a car’s actual cash value (ACV), not the cost of a replacement car or the original price you paid for the vehicle.
Fighting an Insurance Company’s Decision to Total a Car
Car insurance companies and state laws determine when a car is declared a total loss, so it is unlikely that you will be able to fight your insurer if they decide your car is totaled. Unfortunately, you can typically only fight your insurer about your vehicle’s value.
However, if your insurance company declares your car a total loss in violation of your state’s laws, it is important to contact your state’s insurance regulator for help. They can investigate the situation and see if the insurer is acting in bad faith.
Yes, an insurance company can force you to total your car because state laws regulate when cars need to be totaled. Your only option is to negotiate with your insurer about the car’s value, as convincing the insurer to adjust the value might affect whether the car has to be totaled according to state law.… read full answer
When an Insurance Company Can Total Your Car
Cars are totaled when the cost of repairs exceeds either the vehicle's pre-crash value or a specific total loss threshold established by the state. For instance, in New York, a car is considered totaled if the cost of repairs is more than 75% of the vehicle’s actual cash value (ACV). Total loss threshold laws account for the fact that damage is often more extensive than it first appears.
It’s also important to note that the ACV is not the price you paid for the car. Instead, the ACV is an approximation of the car’s worth just before it was damaged, so it factors in things like depreciation and mileage.
What You Can Do If Your Insurance Company Wants to Total Your Car
Even if you don’t want your insurer to total your car, you can’t argue with your state’s total loss threshold or ask the insurer to use a different system. However, you can argue that your car was worth more than the ACV chosen by the insurer.
Just bear in mind that you cannot simply choose an estimate based on your own opinion. Instead, you need to provide justification for your estimate of the car’s value, such as an independent appraisal, photographs of upgrades or modifications you made to the car, and/or the prices of comparable vehicles for sale in the area.
If the insurer does not agree with your statements regarding the car’s ACV, you can reach out to your state’s insurance regulator for help. You can also seek arbitration or litigation, though legal fees are likely to decrease or even negate any monetary gains that you make.
WalletHub Answers is a free service that helps consumers access financial information. Information on WalletHub Answers is provided “as is” and should not be considered financial, legal or investment advice. WalletHub is not a financial advisor, law firm, “lawyer referral service,” or a substitute for a financial advisor, attorney, or law firm. You may want to hire a professional before making any decision. WalletHub does not endorse any particular contributors and cannot guarantee the quality or reliability of any information posted. The helpfulness of a financial advisor's answer is not indicative of future advisor performance.
WalletHub members have a wealth of knowledge to share, and we encourage everyone to do so while respecting our content guidelines. This question was posted by WalletHub.
Please keep in mind that editorial and user-generated content on this page is not reviewed or otherwise endorsed by any financial institution. In addition, it is not a financial institution’s responsibility to ensure all posts and questions are answered.
Ad Disclosure: Certain offers that appear on this site originate from paying advertisers, and this will be noted on an offer’s details page using the designation "Sponsored", where applicable. Advertising may impact how and where products appear on this site (including, for example, the order in which they appear). At WalletHub we try to present a wide array of offers, but our offers do not represent all financial services companies or products.