Can I keep my car if the insurance company totals it?

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Things to remember...
  • A total loss is a vehicle that’s been written off by an insurance carrier after a property damage claim
  • The property damage adjuster assigned to your claim will decide whether or not the vehicle should be totaled
  • In most cases, cars are totaled because the damage exceeds the car’s value or because the car’s frame is bent

When you’re caught off guard, a quick trip to the store can turn into a disaster in the blink of an eye.  Braking suddenly or someone else can lead to a collision.

When you’re in an accident, it’s what you do after you get to safety that matters the most.

One of your biggest worries is what will happen to your car and how fast it will be repaired. Unfortunately for you, if the damage is bad enough, the insurer might not pay for repairs at all.

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What is a total loss claim?
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When you file a claim for damage to your vehicle, there’s a good chance that the claim could go from a simple first-party physical damage claim to a total loss claim after estimates have been calculated.

A car is a total loss when the cost to repair the property is higher than what the insurance company has determined the car is worth.

Why won’t a company pay to repair a car when it’s totaled?

It wouldn’t make sense for an insurer to pay a repair shop to fix the serious damage that was done to your car if it’s been declared a total loss. One of the main reasons is because of how the auto policy contract is written.

It’s the insurer’s responsibility to pay for covered losses, but there are always limits of liability.

The limits of liability for your physical damage coverage on your personal auto policy are clearly defined.

In the contract, the insurer only agrees to pay up to the car’s actual cash value (ACV) when settling a damage claim for your vehicle.

If the insurer finds that the cost to repair the car is higher than what the car is worth, the insurer would be paying more than it is obligated to if it repaired a totaled car.

Can a car be totaled when the damage doesn’t exceed value?
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Most claims are settled by total loss specialists when the ACV is lower than the estimated cost of repairs. There are exceptions to every rule. In some cases, a car could be written off because it has

There are exceptions to every rule. In some cases, a car could be written off because it has rust damage or because the frame of the car is bent.

There are states with rules that allow insurers to total out vehicles even when ACV isn’t exceeded.

In these states, there’s a Total Loss Threshold that’s used. The TLT says that only a percentage of the ACV must be exceeded for the carrier to have a right to dictate the car totaled.

In some states, the TLT is as low as 50 percent of the car’s value.

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Some Totaled Cars Are Easily Repairable

Cars that don’t retain much value and older vehicles can be totaled easily.

Even a minor dent on the fender is enough to total out a car when the car is only valued at $1000 or so, which is something to consider before you decide to settle the claim and give the insurance company your car.

If you can do the repairs, it might make sense to keep the car.

What is the process of settling a total loss claim?
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Typically, the insurance company will offer you a settlement that includes the car’s ACV and some other costs. Your claim may include sales tax, titling fees, and projected taxes.

Once you’re offered the settlement and you accept, you’ll sign the paperwork to make it official.

The paperwork includes transfer documents so that the insurer can apply for a salvage title for the car in the company name.

Usually, the carrier will sell the car off at auction as is to recoup some money. Just because it’s standard process to sign a totaled car over to the insurer, does not make it a requirement.

What do you do when you want to keep your car?

If the damage isn’t significant or you have a really strong attachment to your car, you can keep it.

Claimants who make the decision to keep their cars aren’t going to receive the same amount of money that someone who lets go of their car does.

Your claims payout amount won’t be as high. The salvage value of the car will be subtracted from your offer.

What is salvage value and how is it determined?
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Salvage value is the total value of property when it’s sold at the end of its useful life.

Since a totaled car must be issued a salvage title, it’s not worth as much after repair as it was before it was ever damaged.

Salvage value is calculated by considering the property’s purchase price and then determining how much the car will depreciate each year that it’s owned.

The depreciation expense is subtracted from the car’s value and then the salvage value is determined. It all depends on how much the car was worth at the beginning of its life.

You Pay for All of the Repairs

You do have to be realistic about what you can repair and what you can’t. If the repairs are cosmetic, it could make a lot of sense to keep the car.

If the damage is mechanical, consider the cost and your skill level for doing car repairs.

If you’re not satisfied with the decision made by your insurer, you don’t have to stay with the company.

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