By Madeline Klein on October 16, 2018.
No one ever wants to be in an accident. But totaling a car during an accident can make things even worse. On top of figuring out insurance coverage, any doctor bills, and dealing with insurance companies, totaling a car means there’s also the hassle of getting a new car.
It can be confusing and frustrating when a car is totaled, so the more you know about it, the easier the process will hopefully be for you.
What is a totaled car?
After an accident, your car will either be considered a total loss or a repairable claim. When you’ve totaled your car, or have a total loss vehicle, it means that your vehicle is not worth the cost it would take to repair it. It could also mean it is simply too damaged and is unable to be repaired. A total loss vehicle is declared by your insurance adjuster and state laws.
If your car isn’t totaled, that means it's repairable. If that’s the case, you’ll start the claims process so you can get your car fixed and hit the road again.
When does an insurance company decide a car is totaled?
Adjusters will inspect the vehicle. They look at many different things, but there are a few key questions adjusters will ask to determine if your car should be considered a total loss vehicle:
- Can the repairs be done safely?
- How close are the repair costs to the car’s value, or will the repairs cost more than the value of the car?
- Do any state laws require the car to be declared a total loss because of the extent of the damage?
Is my car totaled if the airbags go off?
There’s a common misconception that your car will automatically be considered totaled if your airbags go off. That comes from the fact that airbags are expensive to replace. If you have an older ride and the airbags deploy, it's possible the car could be totaled.
However, if you’re in a newer car and there isn’t much other damage, your car could be fixed and not totaled. It really depends on the age of the vehicle and the costs for repairs.
What happens if my brand new ride is declared a total loss vehicle?
The answer to this question really depends on who is found to be at-fault for the damage.
If you have Collision or Comprehensive coverage, those coverages pay for damage to your car no matter who was at fault. Some insurance companies might even pay you the value of your vehicle when you bought it, depending on your policy.
Here at Say, we always include New Car Replacement coverage when you purchase Collision and Comprehensive coverage. Any Say driver who has Collision or Comprehensive qualifies for New Car Replacement with Say. They’ll need to meet a few guidelines for this coverage to apply:
- The damage was caused by an accident covered under the Collision or Comprehensive coverage.
- You are the original owner of the car.
- The car was purchased within 12 months of the accident.
- The car had less than 15,000 miles at the time of the accident.
If you don’t have Collision or Comprehensive Coverage covering your ride, then you may not get anything to help cover the damages to your vehicle. But don’t start worrying yet. If someone else is found to be at-fault, you could get some help to pay for your car if the at-fault driver has liability coverage.
We’ve got an example coming in hot here! Say you buy a new car for $10,000. After you pop the champagne to celebrate your new purchase, you drive the car around town for a few months. Now let’s fast forward a bit. We all know cars lose value as soon as they are driven off the lot, so about six months later the car is now worth $9,000. Around that time, you’re in an accident where you and the other driver are both equally at-fault.
The other driver’s insurance may only offer to pay you $4,500. That’s a bit of a bummer because that’s only 50% of the value of your car at the time of the accident. But, if you have Collision or Comprehensive coverage, your insurance provider could help cover the remaining cost. You could then get a car of similar value and would be back on the road in no time!
What happens to the totaled car?
Basically, there are two ways for this to go if there's insurance to pay for the damage. First, if you want the pre-accident value of the vehicle (minus your deductible, if applicable), then the car owner signs over the title to the insurance company that paid for the damage. The insurance company then owns the car and typically sells it or its parts at an auto auction. The proceeds from this sale are referred to as the "salvage value."
Or, if you can't stop thinking about the long road trips and fun adventures you had in the car and want to keep it, then you'll receive the pre-accident value minus the salvage value. If you did this, the car would probably get a salvage title, depending on the age of the vehicle. This new title can lead to issues, like making it more difficult to pass the DMV inspections. Sometimes insurance companies won't insure a salvage title because of the added risk, or they may treat your coverage differently. And know that the salvage title is reported to a national database, so if you go to sell it, anyone will be able to find out that it is salvaged.
Here at Say, we can insure salvage title vehicles. But if you get into another accident, the car’s value will likely be considered lower, making the payout less than a clean title car.
What if I am still paying a loan on a totaled car?
The totaled car insurance payout may not always equal the value left on your loan. If your car is totaled, the claim check will likely be paid to both you and your lender. At this point, you’d need to talk to your lender about the claim check and the process they’d like to use. Every lender is a bit different.
Totaling a car is a bad situation all around, but with the right insurance you can hopefully get back on the road without too much trouble. Keep up on your policy and do a review of your car insurance coverage every once in a while. You’ll be thanking yourself when situations like a totaled car come up!