Being involved in a major accident can be mentally and physically demanding. What adds to that stress is the worry of dealing with a totalled car. The best way forward is to get informed before accepting or rejecting an insurance offer for your totaled car. In this post, we will leave you with the basics of how insurance companies calculate the value of a crashed vehicle. Armed with this knowledge, you will be better equipped to make a decision on whether you want to accept the insurance offer, sell your car, or get it repaired.
What Is a Totaled Vehicle?
Contrary to popular belief, totaled car has absolutely nothing to do with how much auto insurance coverage your car has. Instead, it’s a simple calculation of whether it’s cheaper to buy a replacement vehicle or fix the crashed one. A car is declared totaled when the cost of repairing the vehicle surpasses the value of the car before it was damaged. Here’s an example. Let’s say you own a 2014 Toyota Camry that has a market value of about $10,000. Now, let’s assume you get into an accident and the car gets severely damaged. Upon inspection, if it’s found that the cost of repairing the vehicle, which includes buying replacement parts and labor cost, exceeds $10,000, then the car is officially declared as totaled.
How Insurance Companies Cover Totaled Cars?
After evaluating your crashed vehicle, insurance companies can declare your car as a total loss. This basically means they officially consider it to be a totaled vehicle. When declared a total loss, insurance companies feed the details of your vehicle in their totaled car value calculator software and then come with a value of the vehicle before it got into an accident. The make, trim, model, and year of your car are noted down along with other details to estimate the pre-crash market price of the vehicle. The insurance company then offers that sum as coverage for the damaged car.
What Happens If You Accept Total Loss Offer?
When insurance company hands you a check for your total loss vehicle, they essentially expect you to use the money to buy a replacement vehicle. It’s up to you to take that offer and allow them to take away the crashed vehicle or keep the vehicle and get it repaired yourself with your own money.
Can You Challenge the Insurance Offer and Ask for a Better Deal?
The short answer to that question is yes. However, before you start negotiating you should know how insurance companies calculate the pre-crash value of totaled vehicles. Insurance companies generally pick 5 cars of the same make, model, and year. They start by removing the most expensive and the cheapest vehicle from that list. They then calculate the average price of the 3 remaining vehicles and that’s the value they usually offer for the crashed car. As the vehicle owner, you have the right to ask for the details of the calculations. If you find out that the vehicles used to calculate the total loss coverage were somehow lesser in value, you have the right to negotiate or even challenge the offer.