Total Loss

A totaled car means different things in different situations. If your old car is in a mild collision that sets off the air bags, your insurance company could declare it as totaled. In other cases, vehicles must have more extensive damage to reach the threshold of a totaled car. It's important to understand your auto insurance policy so you know what to expect when filing a claim for total losses.

Total Loss Qualifications

The term "total loss" is a technical and legal term, described in your insurance policy. Each state imposes different requirements for "total loss" declarations, though most consider your vehicle to be a "total loss" if the cost to repair its damages cost 70 to 75 percent of your car's value at the time.

There are different scenarios in which your vehicle could be deemed a "total loss", including:

  • Theft without recovery.
  • Vandalism.
  • Flooding and water damage.
  • Arson.
  • Storm damage.
  • Engine fire.
  • Collision.

If your car is totaled in any of the above scenarios EXCEPT a collision, you may be eligible for compensation if you have comprehensive auto insurance. Comprehensive auto insurance is not required by all states but is beneficial to have when the unexpected happens. Liability coverage (required in almost every state) and collision coverage provide reimbursement for total losses caused by collisions.

First Steps When Your Car Is a Total Loss

The process for filing a totaled vehicle claim varies slightly from other claims. Begin by:

  • Determining if you owe money on the vehicle.
    • If you owe money on the car, you might need to sign over the title to your insurance company with a power of attorney once you pay off the loan.
  • Locating the vehicle's title.
  • Research the value of your vehicle.
    • This number will come in handy when negotiating a settlement with your insurance provider.

File the loss claim on the same day the loss occurs, or as soon as possible and obtain a contact number for your agent so you can stay in touch throughout the claims process. If the vehicle was totaled because of an accident, theft, or vandalism, report the crime to the police—your insurance company may need the police report later.

Car Insurance Companies and "Total Loss" Claims

At the end of the day, your car insurance provider owes you the fair market value of your car before it was declared a "total loss." Your insurance company might choose to:

  • Offer you a cash payment for the pre-loss value of your car, based on its age, make, model, and mileage.
  • Provide you with a vehicle comparable in make, model, and value to your car, pre-loss.
    • The insurance company is responsible for paying fees associated with the title transfer, sales tax, and license fees.
    • In many cases, states require that the replacement car be available within a specific distance of where you usually park your car.

If you do not agree with the insurance company's estimated value of your vehicle, check your policy to see if you have the right to hire your own appraiser; you'll need to pay for their services out-of-pocket. Be prepared for your totaled vehicle's insurance claim to take a few months from start to finish. You can help the process go as smoothly and quickly as possible by keeping up with all deadlines and communicating regularly with your agent.