Auto insurance companies consider a vehicle totaled when the cost to repair the damage exceeds a certain percentage of the total value of the vehicle itself. This means that minor damage to an older model may qualify it as totaled, whereas extensive damage to a brand new model may not.
The total value percentage used to determine whether a vehicle is totaled varies from provider to provider. Some companies total a vehicle when repair costs exceed 51 percent of the vehicle's worth; others use 80 percent as their limit. Once it determines your vehicle to be totaled, your insurer will pay you the car's market value, less your deductible. If you choose to keep your totaled vehicle, your insurance provider will pay you the vehicle's cash value minus your deductible, and then subtract the amount of money they would have received from the salvage yard, as well. Your vehicle identification number
(VIN) will then be tagged with a salvage title, which will likely make it difficult to sell, should you try to do so. If you decide to repair the totaled vehicle, you're on your own; your insurance company will not reimburse you for the repair costs.
The general idea of an auto policy is that your insurance company will reimburse you to the point that you're in more or less the same place financially as you were before the accident. By the same token, insurance companies are not in the habit of paying the policyholder a nickel more than their vehicle was worth, either. So, if you drove a '97 Nissan 200SX before the accident, you should be able to buy a '97 200SX in essentially the same condition with your claim check (minus, of course, the amount of your deductible). Unfortunately, this is not always the case.
When cross-shopping auto insurance companies, it's essential to find out how each insurer determines a vehicle's cash value. Naturally, you want to find a company who will pay you at least what your car is worth, not one who's going to cheat you out of your vehicle's true value. Each insurance company has a proprietary database of prices that its claims adjusters use to determine your vehicle's cash value. This means that the amount they assign to your car may not match the one that you find in another pricing database.
If the money your insurance company gives you for your vehicle is significantly less than the purveying market value for that vehicle, you have the option of bringing in an independent appraiser, though this will likely be at your own expense. If that doesn't work, you may eventually have to resort to arbitration. This is unlikely, but it never hurts to prepare yourself for the worst
So drive safe, kids. Nobody deserves to deal with the headache (figuratively and literally) of totaling a vehicle.
Disclaimer: This article is published for general information only, and is NOT intended to serve as specific legal or financial advice. Readers should talk to an insurance professional before making changes to any insurance policy.
