Your Car is “Totaled”. What That Means and What’s Next
The word “totaled” is actually a slang auto insurance term resulting from the phrase “total loss”. This refers to a vehicle that will cost more to repair than the actual cash value of the vehicle. For an insurance company, they will not want to repair the damaged vehicle due to the repair costs exceeding the value.
This most often occurs when there is front end damage that involves multiple quadrants of the vehicle including the engine compartment, engine, steering or if the frame is bent. It also occurs very often when flooding has submerged a vehicle to the floorboards or higher.
While an accident will cause immediate, visual damage, flooding will often render a car a total loss because of the long term damage that the water will cause to the car and its electrical systems.
So what happens if your car is “totaled” and what occurs next?
First of all, an appraiser will make the determination if the car is a total loss. This will be based on a variety of factors including age, mileage, condition and options the car has and the damage it sustained. Rarely will the amount a policyholder receives from their totaled vehicle allow them to purchase a new replacement. It should, however, be enough to allow them to purchase a similar vehicle.
If your totaled vehicle was in exceptional condition prior to the incident, or if it had extensive aftermarket improvements, be sure to let the insurance company know. This could impact the settlement amount. Once a settlement has been reached, the policyholder will receive a check from the insurance company and the insurance company will take possession of the wrecked vehicle. If the car has substantial personal or meaningful value to you, you can negotiate with the insurance company to maintain ownership, should you decide to have it repaired. You, however, would be liable for any repair costs above and beyond the settlement amount.
Declaring a vehicle “totaled” is rarely a win for either the insured or the insurance company. It is a way, however, for both parties to move forward in a way that makes economic sense.
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