Most people are involved in a car accident at some point in their lifetimes. Depending on the nature of the collision, car damage can be severe and expensive to repair. Figuring out whether a car is a total loss after an accident is a major point of contention for drivers and insurance agencies alike. Our guide below goes over everything you need to know to evaluate whether your car is totaled after an accident.
What Does It Mean When a Car Is Totaled?
The definition of what constitutes a totaled vehicle varies from insurance agency to insurance agency and may depend on state policies and statutes. But typically a car is considered totaled if the repair costs are higher than its actual cash value (ACV).
Let’s say a vehicle is valued at $5,000 but requires $6,000 in post-accident repairs. In this case, it would be impractical to repair the damage that a vehicle sustained, rendering it a complete loss by definition.
In some cases, insurance agencies will consider a car a total loss even if the cost of damage is less than its ACV. Most agencies consider repairs impractical if they make up 75% of a car’s ACV, but this ultimately depends on your insurance policy.
How Does Insurance Figure Out Whether a Car Is Totaled?
Agencies calculate the total loss ratio, which is the cost of repairs divided by the ACV, and then compares it to limits set either by the company or by state law to determine whether a vehicle is totaled. This is also referred to as the damage ratio.
Some states set a total loss threshold (TLT), which determines the minimum ratio needed to be declared a total loss. If the state doesn’t dictate a TLT, agencies use a total loss formula (TFL) to determine whether a car is totaled.
Massachusetts uses the TLF rather than a state TLT. You can take a look at the formula below:
Cost of Repair + Salvage Value > Actual Cash Value
What Happens When a Car Is Totaled?
Depending on the state you live in, an insurance company will take ownership, or salvage, a totaled vehicle. The agency then pays the pre-loss ACV to the insured and forwards the certificate of ownership, license plate, and required fees to the Department of Motor Vehicles (DMV). Afterwards, the DMV issues a salvage certificate.
Sometimes a car is repaired, reregistered to the DMV, and identified as a revived salvaged vehicle. Other times, the insured keeps their totaled vehicle, in which case, the insurance company deducts the salvage value from the claim payment.
Evaluate Post-Accident Damage at Collision 24
If your car was involved in an accident in Brockton, Randolph, or Stoughton, we urge you to come into Collision 24 to evaluate the damage. You can schedule a service appointment online or you can call 508-586-2010. We’re open from 7:30 am to 5:30 pm Monday through Friday and 8 am to noon Saturday.