In the auto insurance industry, a car is deemed a total loss, or "totaled," if the insurer's cost to repair the damage and outfit you with a rental car exceeds the cost of giving you a check for a replacement vehicle. At this point, you must decide if you want to take the insurer's check for a replacement, use the claim money to repair the damages or dispute the claim of total loss with an arbitrator.
Determining a Total Loss
After an accident, a vehicle's total loss declaration will depend on the insurer. Some companies will "total" a vehicle if the cost to repair it is as low as 51 percent of the vehicle's actual cash value (ACV), while other companies wait until this percentage is over 80 percent. The totaled car may still be operable, but if the ACV is already low, as in the case with older model cars, the insurer may prefer to pay for low-cost replacement.
If you disagree with the vehicle total loss declaration and your insurance policy has an appraisal provision, you may hire an outside arbitrator to examine the vehicle and estimate the cost of repair. This may be your best bet if your vehicle has sentimental value, or if you think the insurer's claim check for a replacement vehicle is too low. You can look up your vehicle's ACV at any online blue book calculator.
Once a car is deemed a total loss, the more common option is to take the insurer's settlement claim check to replace the lost vehicle. Your settlement check will include the registration, tax and titling costs for a similar-value vehicle. If the check is enough to purchase the car you need, this may be your best option. In cases of a vehicle loss due to a traumatic accident, a new car may give you peace of mind.
Repairing Your Vehicle
If you have a good relationship with your local garage or can fix the vehicle yourself, consider using the settlement check to repair your totaled vehicle. This is your best option if you disagree with the total loss declaration but do not want to fight the insurer to reverse the loss designation. Keep in mind that will greatly diminish the value of your vehicle in the eyes of the insurer, but you will be able to retain your vehicle, especially if you disagreed with the loss in the first place.
- Edmunds; Tips for Filing a Claim After a Serious Car Accident; Steve Siler; October 2000
- Oregon Department of Insurance; Vehicle Total Loss Insurance Tips; January 2010
- Geico. "What You Can Expect From The Total Loss Process." Accessed June 22, 2020.
- Vermont Department of Motor Vehicles. "Salvage or Rebuilt Title." Accessed June 22, 2020.
- Capital One. "My Car Was Just Totaled. What Do I Do?" Accessed June 22, 2020.
- Kelley Blue Book. "Frequently Asked Questions: My Car's Value." Accessed June 22, 2020.
- State Farm. "What Happens If Your Car Is Totaled?" Accessed June 22, 2020.
Leah Waldron is the head of Traveler Services at First Abroad, a gap year travel company based in Boston and London. As a travel, research and LGBT news writer, Waldron has publication credit on magazines and newspapers including "Curve Magazine," "USA Today," "The Sun Sentinel" and the "The Houston Chronicle." Waldron has a bachelor's and master's degree in creative writing from Florida State University.