What Happens When I Total My Vehicle in a Collision?

By Compuquotes Team on March 27th, 2008
Auto Insurance

In most of the United States, insurance companies can declare a vehicle a total loss. A total loss, also commonly referred to as a 'totaled car' is when the damages to the vehicle would cost more to fix than the vehicle is worth. For example, if your vehicle is worth $8,000 and the cost of repairs would be $8,000, then your vehicle would be considered a total loss. The rules, laws and procedures vary from state to state, but it's important to know your rights when your vehicle is labeled as a total loss by the insurance company. Some insurance companies will allow you to purchase the vehicle back with a 'salvaged' title on the vehicle, and these vehicles are nearly impossible to re-insure.

Your vehicle is worth a fair market value (FMV) that is determined by your insurance company. If you don't agree with the FMV that your insurance company sets out, or the actual cash value (ACV), you can hire an independent appraiser to determine the value of your vehicle, or seek the advice of a lawyer.

Some insurance companies will consider a vehicle a total loss when the cost of repairs exceeds 51 per cent of the vehicles actual cash value. Most insurance companies allow for 80 per cent of the actual cash value of the vehicle before it is considered a total loss.

If you decide to keep the vehicle and are allowed to do so by your insurance company, you would typically receive the actual cash value of the vehicle minus your deductible and the money the insurance company would have received at the salvage yard for your vehicle, and then you can have the car fixed yourself.

You do not have to accept the terms of the insurance company or the price that they are offering for your totaled car. You can discuss with them the price that they are offering you for your vehicle, but that will mean that the settlement for your vehicle could take a considerably longer period of time. If you have loss of use on your insurance policy (when you receive a rental car when your car is being repaired or replaced) dragging out the claim can mean that you will lose your rights to a rental car after the initial offer for your totaled vehicle has been made.

Being in a collision is not a fun experience. If you are not at fault, typically your insurance company will deal with the at-fault party's insurance company for you and will work with you and the insurance company to ensure that you get the money that you deserve.

If you are found at fault in the collision, then your insurance company will pay for the damage or replacement of your vehicle. It is important to remember that if you do purchase the vehicle back from the insurance company that you could have a hard time insuring it again, especially with the same insurance company. You will be required to have a number of safety inspections on your vehicle after it has been fixed to prove to the insurance company that the car is safe to be on the road again.

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