Sometimes, people who have been in traffic accidents talk about their cars being “totaled.” However, their definitions of a totaled vehicle might not match up to what an insurance carrier would say.
If you have ever wondered what makes a car “totaled” in the eyes of insurance companies, read on.
What Does It Mean When a Car Is Totaled?
To an insurance company, a totaled car will basically cost more to repair than its actual cash value. And in some instances, even if the cost to repair the car is less than its cash value, it may not be worth fixing.
For instance, a car that has been in a collision and requires $2,500 in repairs but is only worth $3,250 may simply be considered totaled. This is up to the discretion of the insurance carrier to make a final determination. In the state of Pennsylvania, vehicles usually must have a cost to repair plus a salvage value that exceeds the actual value of the vehicle to be labeled as truly “totaled.”
Can a Car Owner Keep Their Totaled Vehicle?
After determining that a car has been totaled, the insurance carrier takes ownership of the car. After getting a salvage title for it, the carrier forwards all necessary documentation and items to the Department of Motor Vehicles which issues a special certificate.
The car will not necessarily be junked, however. Sometimes, the car may be restored and sold as a salvaged or revived salvaged vehicle. And if the person wants the car back for some reason, the insurance carrier will deduct its new value from any processed claim amounts.
What Should Someone Do If Their Car Is Totaled?
After being in an accident, a driver will want to talk to their insurance carrier. When their car has been totaled, the insurance carrier may offer the insured driver an appropriate settlement amount depending on the coverage outlined in the policy — most notably as part of the collision and comprehensive coverage guidelines. Unfortunately, the settlement could be less than the remaining balance on the auto loan unless the insurance policy was adjusted to reflect a new auto security coverage endorsement or similar rider.
On the other hand, if the driver whose car was totaled was deemed at-fault, the insurance carrier may not pay for the totaled vehicle. At that point, the driver may be left covering any bills to either fix the car or get whatever monies they can through a salvaging company.
Again, this boils down to the discretion of the insurance provider, not to mention the language used in the auto insurance policy. Be sure to talk with your independent insurance agent about this possibility when you are checking into different coverage types.
Protect Your Vehicle Investment
No one wants to be left holding the bag for expensive repairs or replacement of a totaled car. Talk with your insurance agent today to understand how your insurance policy handles this type of event. That way, you will not be in the dark about your coverage if the unexpected happens.
