If your car is totaled and you’re not at fault, you should file a claim with the at-fault driver’s insurance company and report the accident to your own insurer as well. The other driver’s property damage liability coverage will reimburse you for your car’s actual cash value up to their policy limits. Actual cash value, or ACV, is the amount the car was worth immediately before the accident.
In the event that the other driver does not have insurance, you can file a claim with your uninsured motorist or collision coverage, if you have it. You can also file a collision claim if the other driver refuses to admit fault. In this case, the insurance companies will eventually determine who is responsible. Then, your insurer will recoup the cost of your collision claim and deductible in a process called subrogation.
Insurance companies decide if a car is totaled by comparing the cost of repairs to the car’s value. Exact formulas vary by state and insurance company. However, it’s worth noting that repairs are often more extensive than they appear, and even a small accident can sometimes total a vehicle.
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.
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.
When your car is a total loss, it means the car cannot be repaired safely or that repairs would be too expensive compared to the vehicle’s value. If your car is declared a total loss due to a covered scenario, the insurance company will pay you the car’s actual cash value and will usually sell the vehicle as scrap.… read full answer
Once you file a claim, the insurance company will determine whether the car is a total loss. Depending on your state’s laws, your car may be totaled if the cost of repairs exceeds a certain percentage of the car’s value, such as 75%. If your state does not have a specific total loss threshold, your vehicle will be considered a total loss if the cost of repairs plus the salvage value is greater than the car’s actual cash value (ACV).
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. However, 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.… read full answer
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 keep your insurer from totaling the car if they deem it necessary. But you can negotiate with your insurance company if you think the amount they propose the car is worth is less than the car's ACV.
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 negotiate to your satisfaction, 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 in the insurance company’s interest to prevent a dispute from escalating, so sending a counteroffer directly is the best place to start. Otherwise, the cost of filing a lawsuit is usually not worth the potential rewards, but it depends on your situation.
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