After a car accident, one of the biggest concerns is whether the vehicle is repairable or if the insurance company will declare it a total loss. A totaled vehicle means that the cost to repair it is too high compared to its actual value. If you’re dealing with this situation, understanding how insurance companies determine if a car is totaled and what your options are can help you make the right decision.
What Does It Mean for a Car to Be Totaled?
A vehicle is considered totaled when the cost of repairs plus its salvage value meets or exceeds its actual cash value (ACV) before the accident. Insurance companies assess this based on a total loss threshold, which varies by state.
In Texas, a car is declared a total loss if the cost of repairs is equal to or greater than 100% of its ACV. This means that if fixing your car costs as much as its pre-accident value, the insurance company will likely total it.
How Do Insurance Companies Determine if a Car is Totaled?
Insurance adjusters follow a process to decide whether a vehicle qualifies as a total loss:
- Assess the Actual Cash Value (ACV)
- The ACV is the car’s market value before the accident.
- Insurers consider factors like age, mileage, condition, and resale value.
- Estimate Repair Costs
- If repair costs exceed the ACV, the car will be totaled.
- Even if the cost is close to the ACV, labor expenses, part availability, and depreciation may push it over the threshold.
- Factor in Salvage Value
- The salvage value is what the damaged car is worth if sold for parts.
- If the sum of repair costs and salvage value is higher than the ACV, the car is declared a total loss.
What Are Your Options If Your Car is Totaled?
If your vehicle is declared a total loss, the insurance company will offer a payout based on its ACV. You can either:
- Accept the Settlement and Move On
- The insurance company pays you the car’s market value.
- You can use this money to purchase a replacement vehicle.
- Negotiate for a Higher Settlement
- If you believe the insurer undervalued your car, you can provide evidence of higher value, such as maintenance records, recent upgrades, or comparable sales listings.
- Keep the Car and Take a Lower Payout
- Some people choose to retain the salvage title and fix the car themselves.
- This reduces the payout since the insurer subtracts the salvage value.
- Buy Gap Insurance to Cover the Difference
- If you owe more on your car loan than the insurance payout, gap insurance can cover the remaining balance.
- Without gap insurance, you may still owe money on a totaled car.
What If You Disagree with the Insurance Company’s Decision?
If you believe your car is not totaled or that the settlement offer is too low, you have the right to dispute it.
- Request a Reassessment: Ask the insurer for a detailed breakdown of their valuation.
- Provide Market Comparisons: Research similar cars in your area to show higher values.
- Get an Independent Appraisal: Hiring a professional appraiser can provide a second opinion.
- Consult an Attorney: If negotiations fail, a lawyer can help ensure you receive fair compensation.
Final Thoughts: Understanding Your Rights in a Total Loss Claim
Dealing with a totaled vehicle can be stressful, especially if you weren’t expecting it. Knowing how insurance companies determine total loss and what options you have can help you make the best financial decision. If your claim is unfairly denied or undervalued, you have the right to challenge it.
At Hildebrand & Wilson, LLC, we assist accident victims in navigating insurance disputes and recovering fair compensation. Contact us today for legal guidance on your total loss claim.