There is a good reason why car insurance companies are cautious about fixing badly damaged cars, says Ward. However, if fixing the car means reaching deep into your pockets, you may be better off letting it go. If damage to the totaled vehicle is mostly cosmetic, you may be able to put it back into service for a modest cost. Safety should be your primary concern when keeping a totaled car. “They will cut you a check,” says Ward, and then you’re on your own. It then will be up to you to arrange to make repairs. If you decide to accept the insurer’s decision to total your car but you still want to keep it, your insurer will pay you the cash value of the vehicle, minus any deductible that is due and the amount your car could have been sold for at a salvage yard.
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“There are three software providers that provide vehicle valuations, Blue Book averages and what cars are selling for in your area through dealer networks.” But this software isn’t available to consumers. “We determine the value of your car through market research,” explains Ward. What happens when insurance totals your car?Ĭar insurance companies find that many older cars are simply not worth repairing.
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If the cost of repairs plus the scrap value equals or exceeds the ACV of your car before the accident, then it is totaled. On average, vehicles depreciate more than 20% the first year and approximately 10% each additional year for the first five years, according to Erie Insurance reports using Carfax data.Īfter that, the insurance company will calculate an estimate of the car’s market value, based on the make, model and year, mileage, and condition, as well as the demand in your area for the type of vehicle you have.Īnother factor used to estimate the car’s value is the resale value of the parts and the metal. The ACV is how much your vehicle is worth after factoring in depreciation. The insurer will calculate the car’s actual cash value (ACV). In general, here’s the process of what happens when you total your car: What happens when insurance totals your car? Obviously, it’s not the best news, especially if you really like the vehicle. You can find out the threshold by contacting your insurance agent. Rick Ward, director of auto claims for MetLife Auto & Home, says the standard for deciding when a car is a total loss varies by company and may be set by state regulators. Typically cars are totaled when damage exceeds 65% or 70% of the vehicle’s market value.
The car’s market value is calculated considering the following factors – model and year, mileage and condition, the demand for the car in your area and resale value of the parts.A car is totaled when the damage exceeds 65% to 70% of the vehicles market value.
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