When an Insurer Totals your Car

When an insurer totals your car, always remember that the insurance company is in the business of making money and this will be their priority when it comes to your car or anyone else’s. That said, when your car has been damaged in a car accident, the decision on whether or not to total your car is entirely up to your insurer or the tortfeasor’s insurer. If you disagree with the insurance company on the actual worth of the damaged car, there is a claims process for settling disputes. However, going that route will also mean that the insurer will hold up any payment and if you need new wheels to get to work, the cost will come out of your pocket, not theirs. Here is some additional information on what happens when an insurer totals your car:

• What constitutes ‘totaled’ varies from one state to the next
  State insurance guidelines are often the determining factor on whether or not a car is totaled. Some states’ guidelines say that if the damages exceed 51 percent of the car’s pre-accident value, that qualifies as totaled. Other states total a car when damages have reach 80 percent.
• Common formula for determining a totaled vehicle
  In the simplest terms, an insurance company weighs the cost of the vehicle repairs and rental car against the cash value of your car. What your car was worth before the accident is determined by the insurance company’s proprietary listings that are based on averages.
• How you are compensated
  When an insurance company has determined that your car is totaled, it sends you a check for their arbitrary opinion of the value minus any existing damages and deductible on your policy, if applicable. Essentially, they are buying the car and will then sell it to a salvage yard for as much as possible.

Whether or not the accident was your fault, unless you were driving a relatively new car a year or less old, you’re probably going to experience a financial loss if your car is totaled. For example, if you were driving a very well maintained six-year-old car with 55,000 miles on it, your insurance company is going to value it the same as a six-year-old car with comparable mileage that wasn’t properly maintained. Whether or not your vehicle would have provided many more years and miles of reliable performance is not a concern of the insurance company.

If you disagree with your insurance company on their appraisal of the car’s worth, you can hire an independent appraiser for an evaluation. However, the cost of this will come out of your pocket. If the company rejects the appraiser’s evaluation of the car, you can contact your state’s department of insurance and make an appointment to speak with a consumer representative. If you are still unable to reach an agreement with the help of the representative, you can pursue litigation, but by this point, you’ve probably spent more than you feel you were shorted by the insurance company.