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Is Your Car a “Total Loss”?

A Caucasian middle-aged man who was involved in a major car crash makes a phone call to illustrate when is a car a total loss.

It can be sad to hear that your car is a “Total Loss” for many sentimental and personal reasons, as well as financial ones. If you’ve gotten into a car accident and your auto insurance company tells you your car needs to be totaled, it can be for the following reasons:

  • The vehicle can’t be guaranteed safe repairs
  • The repairs exceed a certain percentage of the vehicle’s actual cash value
  • The total damages are too severe to repair
  • By state regulations, the vehicle must be declared a “Total Loss”

The decision to state a “Total Loss” on your vehicle is to provide you, the owner, with the cost of replacing your current vehicle. The value is approximated by your insurance company by comparing other vehicles of the same make and model, and also the condition of the car before the accident, including such factors as:

  • Damage to car before accident
  • Alterations to car
  • Mileage
  • Vehicle options

If you believe that the amount you’re quoted for the value of your car is too low, you can dispute it and try to negotiate a fairer price. However, be warned that this may delay the payout of the settlement and may incur other costs, such as arbitration or legal representation.

Once, your insurance company generates that estimate, the funds will either go directly to you, if you own the vehicle, or to the leasing or finance company (listed on your policy or title). If the funds exceed that amount that is owed to those companies, then the remaining balance refunds to you, however, if you still owe money on the car even after the “Total Loss” funds post to the account, then you will be responsible for the difference.

In terms of the actual steps once you receive a “Total Loss” decision from your car insurance company, you will need to:

  • Collect personal belongings from vehicle
  • Remove license plates
  • Leave all keys with your insurance company representative
  • Notify the leasing or financing company that holds the title of the vehicle
  • Provide the contact information and your personal account information for your leasing or financing company to your insurance company
  • Handle all forms and paperwork associated with the settlement, claim, title transfer, financial information
  • Rent a car, if need be (your auto insurance policy may cover a rental)
  • Remove your totaled vehicle from your insurance policy after it’s all settled and you’re no longer using the rental car

If you’d like to keep your car, then you may be able to negotiate that with your insurance company, depending on state regulations. However, out of your payoff from the “Total Loss” settlement, the fees for Salvage Title and your premium fee may be deducted.

Even if your car is declared a “Total Loss,” the situation doesn’t have to be a complete loss. Make sure that you are following up with your insurance company and providing them all the documentation that they need to deliver a smooth and quick “Total Loss” settlement fee.

Getting a “total loss” claim could affect your car insurance rates. Make sure you are a getting the best deal by contacting Freeway Insurance. Get a free car insurance quote online or give us call at (800) 777-5620 to speak with an experienced agent.

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