The term “totaled” comes from an insurance term of “total loss.” Simply stated, this means repairs total more than the value of the car.
This may seem a bit troublesome when the vehicle you drive is the only one you own and you need it to get you where you need to go, but that’s how insurance works. If you have a car that’s totaled, you might be in for a bit of a surprise.
Is Your Car Really Totaled?
When you’re in an accident, one of the first things that will happen is the airbags will deploy. Replacing these is a costly venture and is often enough of a cost that your vehicle might fall into the totaled category. You pay insurance every month, but the only investment the insurance company has is the value of your vehicle, not whether or not you have a vehicle to drive every day.
Some States Offer Recourse
In some states, you can shop around to see if you can find a repair shop that can do the work on your vehicle for less than the value. This would bring it out of the totaled category and make it work again for you. Unfortunately, this isn’t the case in every state, which means you need to review the rules of your state if in an accident.
You Can Keep Your Totaled Car
If you’re attached to your vehicle or you know the work that needs to be done is simply more costly than the value of the car but you want to fix it and keep driving, you can keep a totaled car. The car is your property. The payout you receive from the insurance company might be reduced because they won’t be getting paid by the salvage yard, but it might be right for you.
Actual Cash Value for Totaled Vehicles
When you receive the payout from your insurance company, it’s likely going to be a lot less than you hoped. This payout is based on the actual cash value of the car which takes into account the mileage and condition of the vehicle prior to the accident. Once this is determined, the amount is reduced by the amount of your deductible. This is the amount you will receive.
Avoiding Accidents is the Best Choice
It’s in your best interest and the interest of the insurance company for you to avoid getting in an accident and having your car labeled as “totaled”. The insurance company doesn’t want to make a payout for a vehicle that won’t be on the road any longer and you need to be able to keep on driving every day.
A totaled vehicle is the worst case for you and for your insurance company. Review your coverage and find out what you should expect if you happen to get into an accident in your vehicle. Your car is an important part of your freedom to go where you want, stay out of accidents, and avoid a ‘totaled” tag being put on your ride.
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