How do car insurance companies total a vehicle? (New Data)

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Joel Ohman
Founder, CFP®

UPDATED: Apr 20, 2018

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Here's what you need to know...

  • If involved in an accident, it’s important to determine if your car worth repairing
  • If the cost of repairing your vehicle supersedes the cost of replacing it, it’s classified as totaled
  • Actual cash value is how much your vehicle would have sold for at the time of the accident or damage

The right kind of car insurance will cover you financially whether you need repairs or your vehicle is totaled. The first few weeks following an accident can be stressful.

You may be dealing with car problems, possible injuries, or financial needs that result from the accident.

Knowing which formula car insurance companies use to determine if your vehicle is totaled will help you be prepared for their determination after your accident.

Read on to learn what the auto insurance formula for a totaled car really means and then make sure that you enter your zip code above for a FREE car insurance rate comparison!

What does “totaled” actually mean?

You often hear people say that a car is totaled after an accident. The word “totaled” is used for many things but isn‘t always used in the right way.

When it comes to your vehicle, it simply means that the cost of repairing the vehicle supersedes the cost of replacing it.

Sometimes it simply isn’t worth it to repair a vehicle.

Determining if a car is totaled cannot be accomplished by only looking on the outside of the vehicle. A car may look damaged on the outside while the engine is fine.

On the other hand, a car can also look only slightly damaged on outside but have extensive engine damage. Both the car’s engine and its body are taken into consideration when determining if a car is totaled.

Making the determination doesn’t have to be up to the insurance company alone. Your company may make you feel like it’s up to them who should evaluate your vehicle.

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However, you can use a mechanic that is contracted to work with your insurance agency, or you can choose your own mechanic. You have the right to make a choice.

Either way, an insurance adjuster will come out to assess the damage and to look over the report from the mechanic. If you have a mechanic that you are comfortable with or you have used in the past, you can go ahead and use that mechanic.

If you don’t agree with the assessment from the mechanic and/or the adjuster, you can ask for another professional to look at your vehicle. You must be diligent to make sure you get the most for your vehicle!

What is the formula used to determine if a car is totaled?

The first step is to determine the actual cash value. Actual cash value is how much your vehicle would have sold for at the time of the accident or damage.

It is based on the following:

  • mileage
  • age
  • upkeep
  • damage
  • how well its interior and exterior were kept

Often the car insurance company will only use the blue book value of the vehicle because they don’t know other details about your vehicle.

The best thing you can do to be prepared is to keep records of any repair or work you have had done to your vehicle.

This work includes regular maintenance such as oil changes and extensive repairs such as replacing the transmission. This record will help you prove what your car is worth. Without proof, the actual cash value may be wrong. It is left up to you to prove otherwise.

After the actual cash value is determined, the total damage is determined. This decision will be made by a mechanic and an insurance adjuster.

Each state has their cut off between repair and replacement, but it’s usually between 70 to 75 percentSome states use a formula to determine if a vehicle is totaled.

This formula adds the salvage value of the vehicle to the cost of the repairs. If the sum is more than the actual cash value of the vehicle, the vehicle will be determined a total loss.

Below, you can find each state with how they determine total loss:

StateTotal Loss Threshold
New Hampshire75%
New JerseyTLF
New MexicoTLF
New York75%
North Carolina75%
North Dakota75%
Rhode IslandTLF
South Carolina75%
South DakotaTLF
West Virginia75%

Once your vehicle is determined to be totaled, your (or the at-fault party’s) insurance company will provide you with a check for the actual cash value of your vehicle. You can use this money to purchase another vehicle or in a different way if you choose.

As far as your totaled vehicle goes, you can sell it to a scrap metal yard or dispose of it according to your local community’s guidelines.

The most important aspect of making sure your totaled vehicle is paid for is having a car insurance company that you can trust. An online comparison tool is a fast, easy way to weigh your car insurance company options.

Enter your zip code at the bottom of this page to start comparing FREE quotes online now!

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