At some point or another in their lifetime, most people will be involved in a car accident. Depending on the nature of the collision, the resulting car damage could be minor or could be severe as well as 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. For drivers around Brockton, Randolph, and Stoughton, MA, our team here at Collision 24 has put together the guide below which covers everything you need to know and evaluate when looking to determine if 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. Typically, though, a car is considered totaled if the repair costs are higher than its actual cash value (ACV).
For instance, a vehicle may be valued at $5,000 but requires $6,000 in post-accident repairs. In this case, it would be impractical to repair the damage the vehicle sustained, rendering it a complete loss by definition.
In other cases, some insurance agencies will consider a car a total loss even if the cost of damage is less than its ACV. These agencies consider repairs impractical if they make up 75% of a car’s ACV, but this, again, ultimately depends on your insurance company and the policy you have. So, checking out your policy after an accident is always a helpful step you may want to take.
How Is My Car Valued?
When an insurance company looks to determine the value of a vehicle, they’ll look into a number of factors. The make, model, age, mileage, condition, and more will be considered as the insurance company looks to land on the actual cash value so the process can continue.
How Does Insurance Figure Out Whether a Car Is Totaled?
In order to determine whether a vehicle is totaled, agencies will calculate the total loss ratio, which is the cost of repairs divided by the ACV. Then, this figure will be compared to the limits set either by the insurance company and policy 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). Afterward, 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 that case, the insurance company deducts the salvage value from the claim payment.
Other FAQs
Getting into an accident is stressful enough. So, our team has also set aside some other frequently asked questions (FAQs) we often get so you’ll be more informed going forward.
What if I have a loan and my car is totaled?
If you’re paying off a loan on your vehicle and it’s totaled, the process won’t change a whole lot. However, an extra party will be added: your lender. If your car is eventually totaled, your lender will have to be paid off as well, often receiving compensation before you do. Then, if there’s money left over from the insurer, it will be yours.
If you owe more on your vehicle than its ACV, you could also be responsible for paying your lender out of pocket. To prevent this situation, you may want to explore adding loan gap coverage.
Is my car a total loss if my airbags are deployed?
Contrary to popular belief, airbags deploying in your vehicle does not always mean it’s totaled. So, your airbags could deploy in a minor accident, and your vehicle could be covered for repair.
What happens if my car is totaled but I’m not at fault?
If you’re involved in an accident that totals your car, but you’re deemed not at fault, the at-fault driver’s insurance company will typically pay to you the value of your vehicle.
In the event that no one is at fault—for example, the result of a natural disaster—then your insurance company would likely pay to you the cash value of the vehicle.
Finding a New Vehicle
After you’ve worked through your accident and policy, if your car has been totaled, you may need to evaluate your new vehicle options. Fortunately, we’re here to help at this stage, too. Whether you need a car, a truck, or an SUV, our family of dealerships is positioned well to help you find the perfect new ride. Just get in touch with one of our team members when you’re ready to start exploring!
Is My Car Totaled?
Now that you’ve checked out this guide that covered the ways you can determine if your vehicle is totaled and how to proceed, you’ll be ready if you’re ever involved in an accident.
If your car was involved in an accident near Brockton, Randolph, or Stoughton, Massachusetts, and you have any other questions, we encourage you to contact our team. You can even bring your vehicle to our Collision 24 shop to have the damage evaluated. Give us a call to schedule an appointment or ask any questions you may have.
We hope to assist you soon!