Car Insurance: What Does Total Loss Mean

When it comes to car accidents, car insurance terms can often sound like a foreign language. One of those terms you might encounter is “totaled” or “total loss.” But what does it mean when your insurance company declares your vehicle as “totaled”? In this blog post, we’ll break down this concept in simple terms so you can understand what to expect when it happens.

What does totaled mean?

When your car insurance company deems your vehicle as “totaled,” it essentially means that the cost to repair the damages sustained in an accident exceeds the actual cash value (ACV) of the vehicle. In simpler terms, it’s a situation where the cost of fixing your car is more than what your car is worth.

A car can be declared “totaled” for several reasons:

  1. Severe Damage: If the accident causes extensive damage to your vehicle’s structure or essential components, it may be more cost-effective for the insurance company to declare it a total loss.
  2. Safety Concerns: Sometimes, even if the damage appears repairable, there might be safety concerns. A vehicle that’s been in a severe accident may not be safe to drive, even after repairs.
  3. Older Vehicles: Older cars with lower market values are more likely to be totaled because it takes less damage to exceed their ACV.
  4. State Regulations: Different states have varying regulations regarding when a car can be declared totaled. These rules may depend on a percentage of the vehicle’s value.

What Happens When Your Car Is Totaled?

Once your vehicle is declared totaled, here’s what typically occurs:

  1. Settlement Offer: Your insurance company will make you a settlement offer. This offer is based on the ACV of your car at the time of the accident minus the deductible. You can negotiate this offer if you believe it’s too low.
  2. Salvage Value: In many cases, the insurance company will take possession of the totaled vehicle, pay you the settlement amount, and then sell the car for salvage. You can also choose to keep the vehicle, but the insurance company will deduct the salvage value from your settlement.
  3. Salvage Title: If you keep the totaled car and repair it, it will likely receive a salvage title. This designation indicates that the vehicle was declared a total loss at some point.

Can You Insured A Car that was Totaled?

Yes. However, not all auto insurance companies will insure your vehicle now that it has a salvaged title. Most Insurance companies will not allow you to purchase Comprehensive and Collision coverage, so you not be allowed to repair or replace your vehicle if it is damaged again. You will most likely have to purchase a car insurance policy that is considered having liability coverage only.

In summary, when your insurance company labels your vehicle as “totaled,” it means that the cost to repair it exceeds its market value. This is a common occurrence in accidents, especially with older vehicles. Understanding this process can help you navigate insurance claims and make informed decisions about whether to accept a settlement or keep the totaled vehicle. Remember, your insurance company is there to guide you through the process, so don’t hesitate to ask questions and seek clarification if needed.

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