When is a Car Totaled Beyond Repair? October 08, 2019
Did you know the average driver will be involved in a vehicle collision once every 18 years? In other words, if you start driving at the age of 16, your chances of being in a car accident by the age of 34 prove massive.
Fortunately, few of these crashes prove fatal. (Only about three in 1,000 people die in an accident.) But the likelihood that your incident will prove expensive is great.
Due to rising medical costs, for example, the average insured driver claims about $23,450 in injury expenses following an accident. And then there's the damage done to vehicles. For example, when is a car totaled?
Because of increases in the price of car parts and labor, more vehicles than ever before are totaled each year. In fact, prices for car repairs skyrocketed by 61.07 percent from 2000 to 2017.
Read on to learn more about how totaling a vehicle works as well as what options you have following an accident.
When is a Car Totaled?
If you've been in a car accident recently, you may be wondering, "When is a car considered totaled?"
Horror stories abound on the internet of car owners whose rides got declared totaled after sustaining only minor damage. What gives?
Many consumers fail to understand that there are numerous factors involved in declaring a car totaled. These go beyond the amount of repair work and the price of auto parts.
The criteria of total loss varies from insurance company to insurance company and can even be impacted by state regulations.
The Total Loss Ratio
First-party insurance companies consider the actual cash value (ACV) of your vehicle against the estimated costs associated with damage sustained during an accident. If your car's ACV falls below the price of repairs, your car is "totaled."
The same can hold true in situations where repairs prove so costly that they equal at least 75 percent of the total value of the vehicle.
To determine whether or not a car should be totaled, your insurance company will calculate your total loss ratio (cost of repairs / ACV). Then, they'll compare this number to expenses limits set by the state or within the company itself.
If no state regulations apply, the insurance company may revert to the total loss formula (TLF). The TLF is derived through the following equation: repair cost + salvage value > ACV.
When the sum of repair costs and salvage value exceed the ACV, the car will be totaled.
No matter how insurance companies come to a final decision, vehicle owners are left with two options:
- Surrender their car to their insurance company for its pre-accident ACV
- Keep their car and make repairs themselves
In the second case, the insurance company deducts the salvage value of the car from the claim payment. This process leaves many car owners with questions such as: "How to sell my junk car?"
Know Your Rights
When is a car totaled? To answer that question, your insurance company will weigh a variety of factors, from the car's ACV to parts and labor costs for repairs.
But one thing's for sure. Understanding your rights as a car owner as well as having a thorough knowledge of how and why cars get declared total losses will help you navigate this challenging situation.
Particularly if you'd like to keep your vehicle or salvage it yourself.
Interested in more handy tips to help you after a car accident? Browse our blog now to learn more about dealing with an auto insurance company after an accident.