There are many expressions used for when it is no longer viable for you to pay for the repairs to your car and these include, being totaled, a write off, or a total loss. This will basically mean it is not worth the expense involved for you to get your car repaired. A prime example of this is that your car is worth $15,000 and you have been involved in an accident and it will cost $12,000 to repair the car. There is no specific cut-off point, but it is widely accepted that if you have to pay more than 70% of the total value of your vehicle it can be considered a total loss.
If a car has been totaled this will typically mean the only real value of the car is what you will get for either selling the parts of the car off or the scrap metal value. An appraiser can usually let you know of these values. The vast majority of vehicles that are considered to be totaled will generally be older models, as their value will decrease year after year. In fact, for many vehicles it may be extremely difficult to find replacement parts, and if you can find these parts this may still prove to be very expensive. This, once again, may be a reason to write a car off as a total loss.
Definition of a Total Car Loss
The actual definition of a “total car loss” is whereby it would cost more money to repair the vehicle than it is actually worth. So, if a car is worth $7,000, but will cost $9,000 to repair it is a “total car loss”. In this case, the vast majority of, if not all, insurance companies will refuse to have the car repaired and will simply pay you the insured value or the actual value of the car. The main point of this is that you then have enough money to purchase a car of similar pre-damage value.
Why Do Car Insurance Companies Do This?
In all honesty, simply paying out an insurance claim in these circumstances actually benefits both you and your insurance company. In the example used above it makes no real financial sense to your insurance company to pay out an amount of money to repair your car when they know its value is actually less than this. Therefore, by paying out a sum of money in a “total car loss” scenario it is a win-win situation for both you and your insurance company. The process to determine whether a car is a total loss will typically take a few days, but once this has been agreed upon you should receive the insurance value of your vehicle by check or directly into your bank account within a few days.
The main considerations for an insurance company when deciding whether your car is a total loss is if they believe your car cannot be repaired safely, the value of the car is actually less than the cost of repairs to the damage or the specific state you reside in decides that the car should be considered a total loss due to the cost of repairs to the damage that has been caused.