How are total loss car insurance settlements determined?

When your car is a total loss, it means the cost to repair the car exceeds the value of the car. If your car is declared a total loss your insurer may replace your totaled car with an equivalent one or issue payment for the actual cash value of the totaled vehicle.... 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).

Insurance Payout for a Total Loss Claim

For a car that was totaled by an accident, you will be reimbursed by the other driver’s property damage liability insurance if they were at-fault or your own collision insurance if you caused the wreck.

If the damage was caused by something other than an accident, like vandalism or a natural disaster, you can receive a total loss payout from your own comprehensive coverage.

What to Do If Your Car Is a Total Loss

• If you think the insurer undervalued your car, you can present evidence and negotiate.

• You will likely need to send your insurance company your keys, remove your license plates and personal items from the car, and sign over the title.

• If your car was leased or financed and you have gap insurance or loan/lease payoff coverage, file a claim.

For more information, check out WalletHub’s complete guide to totaled cars.

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. ... read full answerActual cash value, or ACV, is the amount the car was worth immediately before the accident.

Claim Options if Your Car Is Totaled but You're Not At-Fault

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.

How Insurance Companies Determine if Your Car Is Totaled

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.

If you total your car with no collision insurance, then your insurance will not reimburse you for the value of your vehicle. Collision insurance pays to repair or replace your car after an accident, so without it, you might have to pay out of pocket to replace the car.

If the accident is your fault and you don’t have ... read full answercollision insurance, your best option is to sell the car in its current state. You will still be able to recover something through the salvage value, which is the amount of money that a salvage yard will pay for the parts and frame.

On the other hand, if the accident is not your fault, then the at-fault driver’s property damage liability insurance will cover the cost of your loss, up to their policy limits. In this case, you will still be reimbursed for the value of your car even if you don’t have collision insurance. However, if your car’s value exceeds the at-fault driver’s liability limits, you will have to file a claim using uninsured/underinsured motorist coverage, file a lawsuit against the driver, or cover the remaining costs yourself.

Collision insurance is not required by any state laws, but you will need to carry it if your car is leased or financed. In general, it’s a good idea to carry collision insurance if you can’t afford to replace your car and the annual cost of coverage is less than 10% of your vehicle’s value.