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The truth about 'totaled' cars: How to keep yours

Crashed your car? Bummer. Even worse is getting a call from your auto insurance company saying it’s a total loss and should go to the junk yard.

Your attachment to your vehicle may be sentimental. In some cases, your bond may be financial: You may not be able to replace the totaled car with the money your insurance company is willing to pay.

How is it determined that a car is totaled?

totaled carTypically cars are totaled when damage exceeds 65% or 70% of the vehicle's market value. 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. You can find out the threshold by contacting your insurance agent.

In general, the process works like this:

The insurer will calculate the car's actual cash value (ACV). The ACV is how much your vehicle is worth after factoring in depreciation. 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.

After 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.

Another factor used to estimate the car's value is the resale value of the parts and the metal.

If the cost of repairs plus the scrap value equals or exceeds the ACV of your car before the accident, then it is totaled.

Working with your auto insurance company

Car insurance companies find that many older cars are simply not worth repairing.

"We determine the value of your car through market research," explains Ward. "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.

According to ISO data reported by the Insurance Information Institute, the average collision claim in 2018 was $3,574. The average auto liability claim for property damage was $3,841.

If you think your totaled car is valuable enough to justify a repair, you can contest your insurance company's decision to declare it a total loss, but be prepared to provide evidence that the car is worth the effort.

If you can demonstrate good maintenance and mechanical improvements, you may be able to win your totaled car a reprieve. Its age and mileage will be key factors.

Can you keep your car if it's totaled?

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. It then will be up to you to arrange to make repairs.

"They will cut you a check," says Ward, and then you’re on your own.

Safety should be your primary concern when keeping a totaled car.

If damage to the totaled vehicle is mostly cosmetic, you may be able to put it back into service for a modest cost. However, if fixing the car means reaching deep into your pockets, you may be better off letting it go.

There is a good reason why car insurance companies are cautious about fixing badly damaged cars, says Ward. "Cars are complicated. All damages are not visible. Once you start dismantling, often you find additional damage."

You think twice about repairing a car that has been seriously damaged. If the professionals who work for your automobile insurance company think the car is beyond repair for a reasonable cost, it probably is. Damage, such as cracks in frames or to airbags, often can't be seen by just looking at a vehicle.

Finding car insurance for a totaled vehicle

Ward says you may run into trouble when you seek auto insurance for a car that has been declared totaled. Your ability to buy collision and comprehensive coverage may be affected.

"That is really up to each individual company,” he says. Before you decide to fix your car, check to see if that is an issue." Some insurers will not accept a car with "a branded title," he adds. "It basically puts a stamp on it that says it is a salvaged vehicle."

Ward notes that the federal government has established a database called the National Motor Vehicles Title Information System to provide information to car shoppers. "All total losses are recorded by the insurance companies. What this does is provide consumers with a database to see if a car has been previously salvaged." That means don’t count on being able to unload your vehicle on a buyer.

Is repairing a totaled car worth the effort?

Only you can decide whether repairing your totaled car is worthwhile.

The best thing is to be well informed,” says Ward. “Talk to your mechanic. Do your research. Make sure you know what you are getting yourself into."


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Tell us your thoughts
4 Responses to "The truth about 'totaled' cars: How to keep yours"
  1. Maggie

    Your trusted mechanic and your proven maintenance and safety record (no accidents, no tickets, no nothing), low mileage and the good condition of your vehicle will go the extra mile to dissuading the insurance company not to total your car.

  2. Amanda

    My car was hit and I have gap insurance on my loan. I've only owned the car for four months and I owe $7,800 on it. I think it's worth $10,000 at my mileage the adjuster is trying to give me only $7,100 or $5,600 if I do a buy back. Will GAP insurance kick in if I do the buy back and pay off my loan so I have a car with no loan on it?

  3. Wwndy

    Good article & info. I'm not an expert but I am a reader and in these days of lightweight cars with unibody construction I think that one must be very careful about what they choose to keep or not after a collision. The secondary/undetected damage issue is very important to consider. Don't assume your car will be fine because of all the safety features that kept you from being injured. Don't damage and nothing more. Tthese laws & rules are in place for a good reason. I would be very careful about making a choice on buybacks as opposed to the old days of frame construction. Let's be smart and careful out there.

  4. Mike

    If the wreck wasn't your fault and the other insurance company is paying for things. Can you opt to keep the car without getting charged the auction cost the car would have brought to them?


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