The word “totaled” conjures up all sorts of unpleasant imagery. Twisted metal, broken glass, and car fluid spilled all over the asphalt. To most of us it means the automobile has been completely devastated and can only be removed from the roadway by a tow truck . But how do auto insurance companies define total loss? And what kind of settlement can you expect to receive?
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What Totaled Means To The Auto Insurance Company
Your auto insurer defines a total loss as a vehicle that costs more to repair that it is actually worth. This is a fairly easy concept to grasp. If your $3,000 automobile costs more than $6,000 to fix, then it is a waste of money to repair the auto.
It gets a little more complicated when there is less daylight between the two figures. Let’s say the accident that damaged your vehicle is more minor, yet the repair bill amounts to $2,500. The insurance company will pay for the repairs, since the car is worth more than it costs to repair, correct? Not necessarily. There is such a thing as “salvageable value.” This is the amount of money a junkyard will pay for the auto. For the above example, lets pretend the $3000 auto has a salvageable value of $800. Subtracting this $800 from the $3000 amount results in a total bill of $2200 for the insurer. That is less than the $2500 repair bill, in which case the insurer might declare the car totaled and save $300 in costs.
Auto insurance companies also know that with repair bills come hidden costs. It what was originally estimated to be $2500 in repair costs can easily balloon to over $3000. If the estimate is fairly close to the car’s cash value, the insurer may consider the car to be totaled and just call it day.
Get The Most Out Of What The Insurance Company Will Offer
Auto insurance companies rely on sources like Kelly’s Blue Book to determine a vehicle’s value at the time of the wreck. Since your car has depreciated in value since you purchased it, its worth is known as its “actual cash value.” This ACV is what the insurance companies will give you for your vehicle.
However, this value is an estimate based on the average value of your car’s model. Your vehicle may be worth more or less depending on its condition. First, be sure to note any modifications you made to the vehicle that might increase its value. This could be security system improvements (car alarms), new brakes, engine parts, etc. Next, research the market value of similar car models in your area. Why does it have to be in your area? Well, vehicles sell for different amounts based on the demand of your area and the standard of living costs. Basically, a car could fetch a higher price in Southern California than rural Alaska. What your car could sell for in your area is a reflection of how much money you can make if you sold it. Get a record of at least three dealerships selling your car’s model in the area. Average this amount.
Now don’t present this figure to the auto insurance company right away. See what they will offer you first. Remember, your car may be worth less than the ACV and you don’t want to end up cheating yourself out of money. Once the insurance company offers their settlement figure and it turns out to be less than the figure you have concluded, present your research to them. Always keep in mind that the settlement can be negotiated. You don’t have to simply accept what the auto insurer is giving you. By doing some homework, you can increase this offer and get what you are due.
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What To Do If You Want To Fix The Car
We can form an emotional attachment to our vehicles. It could be a Jeep that you’ve had in your possession for the last fifteen years. You having been driving that Jeep through thick and thin, through bad times and good times, and you just aren’t ready to part with it. Sure it may be not the most rational thing in the world, but sometimes our vehicles have more value than their price tag suggests.
If your vehicle is deemed a total loss and you still want to fix it, you can accept the insurance companies settlement and pay for the rest out of your own pocket. Follow the advice above to get the biggest settlement offer possible, then cover the rest of the repair bills yourself. You can save more money on the repairs by having used replacement parts and by using an auto body shop you have a prior relationship with. Sometimes you just can’t put a cash value on certain possessions; perhaps your vehicle is one of those things.
The theme of this article, like many on this site, is all about education. The more you educate yourself on the market value of your vehicle, the more leverage you have with your auto insurance company. Education leads to empowerment, and this can save you a great deal of money – whether it means finding the best auto insurance rates by filling out multiple online quotes here at Cheap Quotes Car Insurance, or getting the most cash for your totaled vehicle.