Posted on 05/09/22

Is A Car Beyond Repair When It Is Totaled

Is A Car Beyond Repair When It Is Totaled

Did you know that the average driver will be in a car accident once every 18 years. This means that if you begin driving at 16 years old, your chances of getting into a car crash by 34 years old are high.

These crashes are rare and rarely prove fatal. Only three out of 1,000 people are killed in an accident. However, the chances of your accident being costly are high.

Injuries resulting from an accident are more expensive than ever because of rising medical costs. Then there is the vehicle damage. What happens if a car is totaled?

Each year, more cars are being totaled because of rising costs for parts and labor. The prices for car repairs have risen by 61.07% between 2000 and 2017.

Continue reading to find out more about the process of totalizing a vehicle and what your options are after an accident.

What happens when a car is totaled?

You may have been in a car accident and wondered "When is a vehicle considered totaled?"

Horror stories of car owners who lost their vehicles after only minor damage are common on the internet. What's the deal?

Consumers often don't realize that there are many factors that go into declaring a vehicle totaled. These factors go beyond the cost of repairs and auto parts.

Insurance companies have different criteria for total loss and state regulations can impact them.

The Total Loss Ratio

First-party insurance companies weigh the actual cash value of your vehicle against the costs associated with any damage that may have occurred in an accident. Your car is considered "totaled" if its ACV falls below the cost of repairs.

This is true even if repairs are so expensive that they exceed 75 percent of the vehicle's total value.

Your insurance company will calculate your total lost ratio (cost of repairs/ACV) to determine if a car should or shouldn't be totaled. They'll then compare that number with the expense limits within the company or the state.

The total loss formula (TLF) may be used if no state regulations are applicable. The following equation calculates the TLF: repair cost + salvage price > ACV.

The car will be declared totaled if the sum of the salvage value and repair costs exceeds the ACV.

Vehicle owners have two choices, regardless of how the insurance companies make a final decision:

  1. For the pre-accident ACV, surrender your car to your insurance company
  2. Maintain their vehicle and do the repairs yourself

In this second instance, the insurance company subtracts the salvage value from the claim payment. Many car owners are left with questions like " How do I sell my junk car?"

Know Your Rights

What is the best way to determine if a car has been totaled? Your insurance company will consider a number of factors to answer this question. These include the vehicle's ACV, labor costs, and parts.

One thing is certain. This will make it easier to navigate the difficult situation.

This is especially true if your goal is to save or keep your car.

Are you looking for more helpful tips after a car accident? Check out our blog to find out more about how to deal with an insurance company following an accident.