Understanding ‘Totaled’: What It Means and What to Do Next"

In the aftermath of a collision, you've brought your vehicle to an auto body repair shop, only to be informed by the insurance company that the vehicle is considered a "total loss." This can be a highly stressful situation. Let's explore the crucial next steps you should take.

What does “totaled” or a “total loss” mean?

A vehicle is declared "totaled," or a constructive total loss, when the expense of repairs ,combined with its salvage value (what value it can get at auction or a junkyard), equals or surpasses the car's actual cash value (ACV) prior to the damage. Additionally, an insurance company might total a vehicle if they deem it unsafe for operation, even after repairs are completed.

How is Actual Cash Value (ACV) determined?

Insurers calculate ACV by considering factors like the car's age, mileage, condition before the damage, and the market value of similar vehicles in the area. Keep in mind that ACV is likely to be less than what you initially paid for the car, as it accounts for depreciation.

What to do if your car is totaled

1. File an insurance claim: If you haven’t already, contact your insurer to report the incident and start the claims process.

2. Gather documentation: Collect documents like the car's title, maintenance records, and receipts for any upgrades or new parts that could potentially increase the ACV.

3. Research your car's market value: Use online resources, like Kelley Blue Book or Edmunds, to research the value of similar vehicles to ensure you're being offered a fair settlement.

4. Consider your options: You have several choices after your car is declared a total loss:

● Accept the Settlement: The most common route is accepting the insurance payout (ACV minus deductible, if applicable) and signing over

the vehicle's title to the insurer. This frees you to use the payout towards a new vehicle.

● Negotiate the settlement: If you believe the initial offer is too low, you have the right to challenge it and negotiate for a higher amount. You can provide evidence like independent appraisals, valuations, or proof of recent upgrades to support your claim.

● Keep the car: In some cases, you may be able to retain your totaled car, but it depends on state laws and insurer policies. If you choose to keep the vehicle, your settlement payout will be reduced by the car's salvage value. The car will receive a salvage title, which may affect its future resale value and potentially make it difficult to get comprehensive and collision insurance.

● Keep for parts, donate, sell for scrap: You may also choose to use the car for parts, sell it to a junkyard, or donate it to charity.

What if you have a loan or lease on the totaled car?

Should your totaled vehicle have an outstanding loan or lease, the insurance payout will typically go directly to the lender to cover the remaining balance. Any surplus funds after the loan is settled will be disbursed to you. However, if the insurance payout falls short of the full loan balance, you will be responsible for the difference.

Gap insurance

Consider purchasing guaranteed asset protection (GAP) insurance, especially if you have a loan or lease. Gap insurance helps cover the difference between the car's ACV and the outstanding loan balance, potentially saving you from a significant financial burden.

Total loss claims and credit

While having a car totaled doesn't directly hurt your credit score, missing loan or lease payments during the claims process can. It's essential to keep making these payments until your claim is settled and the loan or lease is officially paid off or transferred.

At Adesa Auto Body, we understand that dealing with a "totaled" vehicle can be a challenging experience. We're here to help you navigate the total loss claims process, ensuring you receive a fair settlement from your insurance company. By understanding your options, you can make informed decisions during this difficult time. If you have any questions or concerns regarding a total loss claim, please don't hesitate to contact us at (208) 395-3135 or visit adesaautobody.com.