It’s a scene no car owner ever wants to find themselves in: a once-cherished vehicle reduced to a hunk of twisted metal and shattered glass. If your car’s been declared a total loss, you may be scratching your head, unsure of the next steps. Fear not! In this blog, we’ll traverse the winding roads of total loss claims and help you discover what to do with your totaled car.
A “totaled” car refers to a vehicle that’s been so heavily damaged in an accident or other incident that the cost of repairing it exceeds its actual cash value (ACV) pre-accident, or is close to it. The term comes from the insurance term “total loss.”
Here’s how it typically works: if you’re in a severe accident and your car is heavily damaged, an insurance adjuster will evaluate the extent of the damage to determine whether it’s worth repairing. They’ll assess the cost to restore the vehicle to its pre-accident condition and compare it to the car’s ACV.
The ACV considers factors like the car’s age, mileage, condition, and market demand. If the estimated repair costs are higher than the car’s ACV, or sometimes even just close to it, the insurance company will declare the car a “total loss” or “totaled.”
Every state in the U.S. has a different threshold, usually defined by a total loss formula or a percentage, for what constitutes a total loss.
Remember, even if a car is declared totaled by an insurance company, it’s not always completely worthless. The car’s salvageable parts can be sold off, or the car itself could be sold to a salvage yard, depending on what the car owner decides to do post-accident.
After your car’s been declared a total loss, your first move should be to file a claim with your insurance company. They’ll offer you a settlement based on your car’s ACV before the accident. This value considers factors like mileage, condition, and age. If you don’t agree with their offer, don’t hesitate to negotiate. Arm yourself with details like recent maintenance, upgrades, or features that could boost your car’s value.
When you accept the insurance company’s settlement, they take possession of your totaled vehicle. You can use the settlement funds to replace your lost vehicle. If you still owe money on a car loan, the insurance payout goes first towards paying off the balance. You’d receive the remainder, if any.
In some cases, you might decide to keep your totaled car, perhaps to repair it or sell it for parts. If you choose this route, your insurer will pay you the ACV minus the salvage value. This amount represents the proceeds they would have received from selling your wrecked vehicle to a salvage yard. Keep in mind, if you decide to repair and drive the vehicle, it will have a salvaged title, which may affect its resale value and insurability.
Selling your wrecked car to a junkyard is an excellent way to recuperate some money if you opt to keep it post-accident. A junkyard like QuikCar will typically pay cash for your totaled car and will haul it away free of charge. When selling, make sure to shop around for the best junk car price, as offers can significantly vary.
If your car is beyond repair and you’re feeling philanthropic, consider donating it to charity. Many organizations accept vehicles in any condition and offer a tax deduction in return. Before donating, verify that the organization is a certified 501(c)(3) charity to ensure your contribution is tax-deductible.
Some dealerships might take your totaled car as a trade-in, even if it’s not in running condition. They’ll generally deduct the salvage value from your new car’s price. It’s an option worth exploring if you’re planning to buy a new vehicle anyway.
This last option might require some sweat equity. You could choose to part out your vehicle and sell the pieces yourself. Often, parts like tires, batteries, and electronic components still have value. Make sure you’re up for the task before going down this road, as it can be time-consuming.
In the end, the path you choose to take with your totaled car will depend on your personal situation and preferences. Armed with this knowledge, you’re now ready to navigate the aftermath of a total loss and make the best decision for you.
Remember, a totaled car doesn’t mean a totaled life. Life goes on, wheels or no wheels. Whether you claim insurance, keep the wreck, sell it, trade it, donate it, or part it out, you now have a roadmap to follow when dealing with a totaled car.