Written by attorney S Edmond ElDabe

My Car is Damaged and the Insurance Company States That The Car is a Total Loss. What Do I Do?

After an accident, your car might be so banged up and beat down that it is beyond repair. Basically, it's totaled. A car is a deemed a "total loss" if:

  • Damage to the car is so great that it can't be repaired safely
  • The cost of repairs is more expensive than the value of the car itself; or
  • The amount of damage is severe enough that state regulations require the car to be declared a total loss.

Your insurance claims adjuster will arrange inspection and inform you if the car is a total loss. Once you get the information, your insurance adjuster will ask you to:

  • Remove your personal items from the car (papers, CD's, aftermarket parts)
  • Leave a key with the car or make arrangements to give a key to your adjuster.
  • Provide your account number and contact information for your finance or leasing company.
  • Complete necessary forms.

What does the insurance company pay for a total loss?

It's never fun to have you car totaled, but if your policy covers a total loss, the insurance company will:

  • Pay the actual cash value (ACV) of the vehicle (plus state fees and taxes) less any deductible.
  • Take ownership of the vehicle then sell the vehicle to a salvage buyer (or you may keep the vehicle yourself)

How is the value of the car determined?

Your car may be priceless to you and you may have already paid it off so that you have no monthly car payment. Too bad. You will only get the value of your car based on a comparison of sale prices of similar vehicles in your local area. Then, we take into account the pre-accident condition of your car, including:

  • Mileage
  • Vehicle options
  • Any damage not caused by the accident

Make sure to always try and negotiate with the insurance for a little bit more. Insurance companies are in the business of paying you as little as possible.

If you want to keep your total loss car...

No matter what your reasons for hanging onto it, you may be able to keep your total loss vehicle, rather than turning it over to the insurance company. If that's the case, the insurance company will pay actual cash value of the vehicle LESS your deductible and less a fair salvage amount.

In California, you will be required to obtain a salvage certificate which brands the vehicle as a previous total loss, which make the vehicle hard to sell later. It also prevent you from getting another total loss payment should the car be damaged again.

Who gets paid for the total loss?

The payment for total loss depends on whether you own, lease or finance the vehicle.

  • If you own the vehicle, you will get paid.
  • If you lease, the leasing company gets paid.
  • If the vehicle is financed (and the finance company is listed on your policy or on your title):

    • The financing company gets paid and if the settlement amount exceeds what you owe the financing company, you will receive the balance.
    • If the settlement amount is less than what you owe, you'll be responsible for paying the rest of the loan balance. (Make sure to always purchase ""gap insurance" to cover your unpaid balances in these situations. Check with your finance company to see if you have gap insurance, or if it is available to you, and if you don't have it, get it.

What do I drive during the total loss process?

If you have rental coverage, then ask your insurance company to pay for a rental vehicle after your accident. Of course, you cannot rent forever. Ask your insurance adjuster for as much time as possible after your car is paid off to continue renting until you can get a new car. Typically, they will offer only 4-7 days.

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