What Makes a Car Totaled After a Wreck?

When most people picture a totaled car, they picture a car crunched like an accordion or a car that is in pieces all over the road. While a car in this condition is undoubtedly totaled, a car that appears to have minor damage may also be declared totaled as well.

How is that possible?

Well, whether or not your car is totaled has a lot to do with the value of your car. Basically, if it will cost the insurance company more to repair your car than it would to replace it, then they will declare your car a total loss. A lot of times a car can look like there is no way it could be totaled, but when repairs start to take place, unseen damage can be found in the engine that can quickly make the repair costs add up. In most cases, if the repairs equal 70-75% of the car’s value, it will be declared a total loss. Even if your car has a high value, it may still be considered totaled if the damage that occurred cannot be repaired to a safe state. In fact, some states even require that a car be totaled if the amount of repairs reaches a certain threshold.

Sweet, so then the insurance company will replace my car?

If only it were that easy. Insurance companies are actually only required to pay you the actual cash value of the car, which they get to determine. They will look at what similar cars are selling for in your area, as well as sources like Kelley Blue Book. But if your car has unusually high mileage or any pre-existing damage, you can expect your settlement amount to be even less. Whether this is good or bad for you depends on your financial status with the car. If the car is paid off and you were considering getting a new car anyway, getting your car totaled can be a blessing in disguise. However, if you still owe on your car, the insurance company will only pay what they consider the actual value of the car, not the amount you owe. Yes, that means you may have to keep making car payments on a car that is no longer drivable.

Do I have any other options?

ctually, yes. If for financial or sentimental reasons you would rather keep your car, then that is an option as well. Insurance companies sell totaled cars to salvage companies, so they may as well sell it to you instead. In that case, the insurance company will deduct an agreed upon salvage amount from your settlement payment. However, keeping a totaled car is risky business. After all, it was declared totaled for a reason.