What is a total loss in car insurance?

What is a total loss in car insurance?

When the cost to fix the damaged car is more than the actual value of the car then it is declared a ‘total loss’. These claims need more attention from the insured person because this claim is different from the other claims. In some states, the car insurance company considered it a total loss if the cost to repair the damages exceeds 75% of the actual value of the car. For example if the cost to fix the damages to your vehicle is $6000 but the actual cost of your vehicle is $5000 then it is considered as a total loss. 

You need comprehensive coverage and collision coverage in your car insurance policy to cover the cost to replace the totaled car. If you have a leased or financed car then you require both comprehensive coverage and collision coverage as a part of your car insurance policy. If you do not have comprehensive coverage and collision coverage in your car insurance policy then you cannot claim to recover the losses incurred from a totaled vehicle. You would have to pay from your pocket to replace the cost of a totaled car if comprehensive coverage and collision coverage is not included in your car insurance policy.

What happens if your car insurance company declared a total loss on your vehicle?

You need to follow the given steps if your car is totaled in an accident:

  1. You need to contact your car insurance agent to file a claim to recover the losses.
  2. Remove personal items and license plates from your vehicle.
  3. You should hand over the keys of your car to the claim adjuster.
  4. Send additional keys if any to the claim adjuster.
  5. Car insurance companies require you to fill the associated paperwork.
  6. If you have a leased car then you should contact your leased company to inform you about the car accident.

You should do these things quickly so that the claim process becomes smooth and quick. The car insurance company kept your car after declaring a total loss.  The car insurance company informs the Department of Motor Vehicles after declaring a total loss that the vehicle has been totaled. Some car insurance companies pay you to repair the damaged vehicle if you do not want to sell the car. But car insurance companies pay you after subtracting the depreciation from the actual cost of the vehicle to cover the expenses to repair the damaged vehicle. 

If you do not agree with the total loss on your car

If the claim adjuster declares a total loss on your vehicle but the actual value of your vehicle is more than the cost to fix the damages to your vehicle. You can negotiate with the claim adjuster if you do not agree with it being a total loss. In this situation, you need to submit the documents and proofs which shows that the actual cost of your vehicle is more than the cost to repair your damaged vehicle. After assessing the proofs and documents, the adjuster will re-evaluate the actual value of your vehicle. If you are not satisfied with the decision of the claim adjuster after re-evaluation of the actual cost of the vehicle then you can file a case in court against the claim made by the insurance company.

How is the value of the car calculated?

Car insurance companies consider different factors to calculate the actual worth of the vehicle. Actual value of the car is determined on the basis of the following factors:

  1. Age of your car
  2. Condition of your car
  3. Mileage of your car
  4. The resale value of your car
  5. The selling price of similar cars in the area etc.

Do you have to pay deductibles if your car is declared a total loss?

You have to pay deductibles if you want to file a claim to cover the replacement cost of a totaled car. Car insurance companies will pay you to recover the losses after the payment of deductibles on the car insurance policy.

How will a car insurance company pay for a total loss?

Car insurance companies calculate the actual value of the vehicle to pay you to cover the replacement cost of the totaled car. The car insurance company pays you after filing your car insurance claims. Car insurance companies compensate you for a total loss after subtracting the depreciation from the actual value of the vehicle.

MyMoneyMyQuotes helps you to understand how you can claim insurance in these types of situations. Here, you can obtain free insurance quotes and you can compare insurance quotes for free to choose the best possible insurance deal for yourself.

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