Is my car Totaled?
When the cost to repair the car damage to its pre-damaged state exceeds the cost of the vehicle’s worth or actual cash value your vehicle will be declared a total loss (“Totaled”). The insurance company may decide your damaged car is a total loss if:
- It cannot be repaired safely;
- Repairs would cost more than the car is worth; or
- State laws require the company to call it a total loss due to the amount of damage. This can vary from 60 percent – 100 percent of the car’s pre-accident value in Texas.
What do I do when my car is Totaled?
When the insurance company declares your car total they will offer you an Actual Cash Value or in Texas called a Fair Market Value. You have the right to keep your vehicle or do a cash settlement with the insurance company. If you are using your own insurance there is usually a deductible associated with using your own coverage. The deductible is deducted from the value of your vehicle. However, if there is someone else who is at fault for your accident you can ask your insurance company to waive your deductible and subrogate the money. (What does subrogation mean?)
Insurance companies want to make you believe that you are
What does “Fair Market Value” mean?
The insurance companies, adjuster, will make note of your mileage, the condition of the body, interior and tires, and any additional parts or equipment you’ve added. Based on the pre-accident condition of your car, your adjuster will find similar models that are for sale in your area and will base the total loss estimate on these comparable cars. This is one method of determining your vehicles “Fair Market Value.”
Also, you always want to make sure to ask for a valuation report. The valuation report will determine the value of your car compared to the other vehicle in your area. A few sites you’ll want to take a look at as you determine your vehicle’s fair market value include:
Compares your vehicle to other similar make and models in your area by using:
- Average asking prices from private sellers and dealers in your area.
- Kelley Blue Book
Uses surveys from nationwide vehicle sales to calculate market value.
Provides data for:
Private party pricing.
Known as an industry leader for accurate new and used vehicle pricing.
National Auto Dealers Association (NADA) Guides
Known for a wide variety of pricing guides for vehicles such as:
Used cars, trucks, vans, and SUVs.
Most companies will issue payment within a few days of finalizing the Fair Market Value of your car. If you leased the car, payment goes directly to the leasing company. If you financed the car, the payoff amount goes to the finance company or bank and you get the rest. Of course, if you owned the car yourself, you get the full check. The insurance company must add to the Fair Market Value and any applicable taxes, license fees and other fees required to transfer ownership.
What do I do when the insurance company’s offer is lower than my lien amount?
Most vehicles in America never appreciate in value. Additionally, the dealerships have a huge markup and finance charges. Therefore, often times, the fair market value doesn’t cover the difference between what the vehicle’s actual worth and the amount left on the loan or lease. This is where gap insurance comes in.
Guaranteed Auto Protection
GAP insurance, protects you from having to pay the difference between your car’s Fair Market Value and the amount remaining on your vehicle loan or lease.
The insurance company totaled my car, can I keep my car?
The quick answer is yes you may, however, this option I never recommend to anyone for several reasons.
1. Most likely the cost of repairing the vehicle will exceed the value of the car.
2. Most States require that you finish the repairs before you can register the vehicle and once registered they will most likely issue you a “Salvage Title”
3. I have seen cases where it causes a lot of problems with insurance companies if you were to be involved in another collision.