Why it's so easy to total your car

By Marilyn Lewis on October 4th, 2011

More vehicles are being declared a total loss by insurance companies every year. Because of that, your car insurance premiums are likely to rise, at least a little.

But the worst of it is this: If you've got an old car and you get into a wreck, even if it really doesn't seem to be a bad crash to you, your insurance company is increasingly likely to call your vehicle a "total loss."

This isn't happening because more drivers are involved in serious crashes--that's not the case. These days, drivers are more cautious, the roads are in better condition and vehicles are safer. Traffic fatalities have been dropping since 2006, says the National Safety Council.

There are many reasons for the trend toward more total losses these days. One of the biggest is the recession. Because of that, drivers are more frugal. They're hanging onto their cars longer. When they do buy a car it's more likely to be a used one.

Credit plays a role, too: the recession has made it more difficult to get loans, including new-car loans. Getting credit for a used car, however, is less difficult.

All this helps push buyers into purchasing--and holding onto--used vehicles. There's a growing proportion of used cars on the road today.

The value of the average vehicle is dropping as more old cars remain in operation longer. Today, the average car is 10.7-years-old. The average car on the road was two years younger in 1995.

When you and your old heap get into a wreck, there's a greater chance it'll cost more to repair the vehicle than it's worth. You can see how a car insurance company would be more likely to declare your wrecked car a total loss.

Even more factors are fueling the increase in totaled cars. Drivers in pursuit of better fuel mileage are buying more fuel-efficient vehicles. They're great for saving at the gas pump, but they are lighter and so suffer more damage when they're hit--again, they're more likely to be totaled.

At the same time, the cost of car repairs is rising with inflation and with more expensive, high technology in the newer vehicles. That means that the cost to repair a car may quickly exceed its Blue Book value.

It's true, also, that the decision whether to call your vehicle a total wreck isn't always up to your insurance company.

In many states, consumer-protection laws require vehicles with a certain proportion of damage to be declared totaled and their titles marked "salvaged."

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