When an accident damages a car, a driver may be told that their car is totaled. There is sometimes confusion about what exactly this means. The legal definition of totaled is that it will cost more to repair the car than the car is currently worth. This usually means it is in the owner’s best interest to take money for the car and not have it repaired. It is important that an owner understand how this works so they can make a fair and informed decision when settling with the insurance company.
An insurance company will not be willing to pay more than a car is worth. This is why the insurance company will offer a totaled value for the car in lieu of paying for repairs. A totaled car doesn’t necessarily mean that the car is beyond fixing or cannot be fixed. It means only that the repair cost would not be worth it. In fact, the driver could take the totaled value and pay the remainder of repairs out of pocket if they want to.
An insurance company may offer a value for the car as a settlement to the driver. Unlike a claim for repairs, in which the value of the settlement is easily matched to the value of repairs, a totaled car is harder to evaluate. A driver can be sure that in most circumstances the insurance company will offer the absolute minimum value for a car. It is often possible to negotiate a better settlement offer.
Determining the Value of the Car
The best thing a driver can do is be sure they have evidence and support to back up their counteroffer. This may come from sites like Kelly Blue Book. The driver should also have a quote from the car repair service detailing the actual cost of repairs. The car repair service or a local dealership may also be able to provide input on the value of the car.
A variety of factors will influence the car’s value, including the accident that caused it to be totaled. Any accident or damage to a vehicle impacts its value. The insurance company will be evaluating the car based on current value, not the value it had prior to the accident that totaled it. This means that any decrease in value due to the accident is factored in. Other factors include wear and tear or damage not related to the accident, total mileage and any previous accidents or repairs. Cars also depreciate automatically over time, which will further lower the value.
An accident may happen with a brand new car, and sometimes drivers expect that they will get enough back to buy the car again. This is usually not the case. If a car is purchased new from a dealership, it loses a large percentage of its value the moment it is purchased and driven off the lot. The totaled value of a car will probably not match its purchase value even after a single day.
Litigation to Improve Claim Value
Although rare, a lawsuit may allow a driver to gain fair value for their totaled car. The rule of thumb is that insurance companies do not like to go to court. Court expenses are costly. Sometimes merely the threat of court is enough to convince an insurance company to raise its offer. From the driver’s perspective, legal fees for litigation are only worth it for a particularly high-value vehicle that is not being valued fairly. Examples may include sports cars or antique vehicles that are difficult for the insurance company to evaluate. Keep in mind that depending on the details of the accident, a driver may already be working with an attorney on a personal injury lawsuit or third party insurance claim. This same attorney may be able to help negotiate the claim offer.
The Impact on Insurance
A driver should not have to continue to pay insurance on a totaled car. If the claim is being worked out with the driver’s own insurance company, then the vehicle will already have been removed from the policy. If the claim is filed with the other driver’s company then the car can be removed once a settlement is reached.
A driver will want to get as much value as possible from their totaled car so they have some money to purchase a new vehicle. By following these tips, a driver will be more prepared to negotiate successfully with the insurance company.