Is it bad if the insurance company totals a car?
Many drivers want to know, is it bad if the insurance company totals a car after an accident? Typically, if you’re not at fault, it won’t impact your car insurance rates if the insurance company totals a car. Instead, it means a mechanic cannot safely repair your vehicle, it’s worth less than the repairs, or laws in your state influence the insurers’ choice. So don’t worry; you can secure affordable car insurance if the insurance company totals a car if you ever decide to switch providers.
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UPDATED: Sep 24, 2021
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- Is it bad if the insurance company totals a car? No, but it means your vehicle is deemed unrepairable
- Providers consider cars to be totaled if the repairs cost more than the value of the vehicle, if laws in the state dictate it, or if the vehicle cannot be safely repaired
- You’ll receive the actual cash value for your totaled car as determined by your insurance company
You crashed your car, and the damage is extensive. But is it bad if the insurance company totals a car after an accident?
Read our guide to determine why your provider deemed your car a total loss, how it impacts your car insurance rates, and learn strategies to help you negotiate a settlement after a car accident.
You can still secure affordable car insurance if the insurance company totals a car; compare the best rates from top companies for free right now by entering your ZIP code into our quote tool above.
When does an insurance company total a car?
It’s not necessarily a bad thing if your insurer totals your vehicle after an auto accident. After filing a claim, you’ll receive a reimbursement check for the actual cash value of your vehicle.
There are different types of car insurance coverage. You typically use comprehensive or collision coverage to replace a totaled car.
If a tree lands on it, for example, then comprehensive coverage reimburses you for the loss, minus your deductible amount.
If another driver hits you, then collision coverage is used to reimburse you. There’s also a deductible associated with collision policies.
Typically, after an accident, an insurance company totals a vehicle for one of three reasons.
- The car cannot be safely repaired.
- The car is worth less than the repair costs.
- State laws deem the car totaled.
Insurers evaluate accidents on a case-by-case basis. So if your airbags deploy, it doesn’t necessarily mean your car is a total loss.
Depending on fault, it might not impact your car insurance rates if the insurance company totals a car.
However, if you’re found liable for the accident, you could see an increase in your insurance rates.
Take a look at how a single at-fault accident increases the average annual car insurance rates in California, where non-driving factors legally cannot influence car insurance costs:
- Average annual car insurance rates with a clean driving record: $2,579.26 ($215/mo.)
- Average annual car insurance rates after one at-fault accident: $3,721.56 ($310/mo.)
Your provider determines the actual cash value (ACV) of your car before the accident and compares it to the cost of the damage.
Some companies define a car as totaled if the damage exceeds 51% of the ACV, while others go up to 80%. Usually, the state you live in dictates the specific percentage.
How is the actual cash value of your vehicle calculated? Unfortunately, companies are not always transparent about the details.
Typically, it includes evaluating depreciation rates and selling values for your vehicle make and model, as well as its mileage, body condition, interior condition, tires, and parts.
You can use an online total loss value calculator to help you estimate the potential ACV for your car.
If you believe the provider undervalued your vehicle, you can dispute it by bringing evidence showing it is worth more.
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What happens when your car is totaled?
What happens when insurance totals your car, and what should you do? The first thing you should do is file an insurance claim as soon as possible, as processing a total loss can take a while.
Next, tow the vehicle to a body shop approved by your insurer for efficient returns.
Then gather the necessary documents, including your car’s title and sales receipt, or request a copy from the DMV.
You should definitely research the value of your vehicle to ensure that you get a fair reimbursement.
What happens when your car is totaled and you still owe money? If you lease or finance your vehicle, check the status of your loan.
You’re responsible for paying off your loan or lease agreement even if the car is undrivable. Consider using your reimbursement to pay for any remaining car payments.
In some cases, the insurer writes the claim check to both you and your lender, and you must agree about where the money goes.
Typically, the dealership or bank is reimbursed first, and then any remaining money is paid out to you.
If you lease or finance your vehicle, consider purchasing GAP insurance to protect you from paying a lender out of pocket for a totaled car.
Finally, start shopping for a replacement vehicle. The insurance company must pay the sales tax on your new car in some states, including California, Florida, Texas, and Virginia. Check your state laws regarding sales tax after a total loss for more personalized information.
Can you keep your car if it’s totaled?
Now that you know what to expect from a car insurance company if the insurance company totals a car, you might wonder if you can keep the vehicle.
It’s possible. However, according to the legal professionals at Nolo, it’s unlikely. Legally, your insurance provider has the right to take a totaled car and resell it to recoup its losses.
If you can successfully convince your provider to let you keep your totaled vehicle, the title becomes a salvage title. Essentially, this implies that you agree to make the proper repairs to the vehicle before driving it.
Because insurers usually sell totaled vehicles to a salvage yard or auction, providers deduct that amount from your ACV settlement.
Just know what you’re potentially getting into if you keep a totaled vehicle. There may be hidden damage that you cannot easily see.
Also, if you attempt to buy car insurance if the insurance company totals a car, expect higher than average collision and comprehensive insurance rates on previously totaled vehicles. This is because the insurer cannot evaluate the full extent of the damage.
Is it bad if the insurance company totals a car?
Losing a vehicle causes a lot of stress, so it’s best to understand all of your options to help you through an otherwise challenging situation. While it’s not bad for an insurance company to total a car, there’s usually a good reason for it.
Try to understand why your provider totaled your car and make an informed decision about moving forward.
Now that you know you can get cheap car insurance quotes if the insurance company totals a car, enter your ZIP code into our free rate tool below to compare premiums from top providers near you.