Crashed your car? Bummer. Even worse is getting a call from your auto insurance company saying it's a total loss and should go to the junk yard.
Your attachment to your vehicle may be sentimental. In some cases, your bond may be financial: You may not be able to replace the totaled car with the money your insurance company is willing to pay.
Typically cars are totaled when damage exceeds 65 or 70% of the vehicle's market value. Rick Ward, director of auto claims for MetLife Auto & Home, says the standard for deciding when a car is a total loss varies by company and may be set by state regulators. You can find out the threshold by contacting your insurance agent.
Working with Your Auto Insurance Company
Car insurance companies find that many older cars are simply not worth repairing.
"We determine the value of your car through market research," explains Ward. "There are three software providers that provide vehicle valuations, blue book averages and what cars are selling for in your area through dealer networks." But this software isn't available to consumers.
According to the Highway Loss Data Institute, the average cost for collision repair in 2009 was $4,245. If you think your totaled car is valuable enough to justify a repair, you can contest your insurance company's decision to declare it a total loss, but be prepared to provide evidence that the car is worth the effort.
If you can demonstrate good maintenance and mechanical improvements, you may be able to win your totaled car a reprieve. Its age and mileage will be key factors.
Keeping a Vehicle that Your Car Insurance Company has Totaled
If you decide to accept the insurer's decision to total your car but you still want to keep it, your insurer will pay you the cash value of the vehicle, minus any deductible that is due and the amount your car could have been sold for at a salvage yard. It then will be up to you to arrange to make repairs.
"They will cut you a check," says Ward, and then you're on your own.
Dan Young, senior vice president of insurance relations the CARSTAR auto body repair group, says safety should be your primary concern when keeping a totaled car. "If there is a way for you to find someone to repair the car or make it safely drivable, that is great," he says.
If damage to the totaled vehicle is mostly cosmetic, you may be able to put it back into service for a modest cost. However, if fixing the car means reaching deep into your pockets, you may be better off letting it go.
There is a good reason why car insurance companies are cautious about fixing badly damaged cars, says Ward. "Cars are complicated. All damages are not visible. Once you start dismantling, often you find additional damage."
Peter Moraga, spokesperson for the Insurance Information Network of California, suggests that you think twice about repairing a car that has been seriously damaged. If the professionals who work for your automobile insurance company think the car is beyond repair for a reasonable cost, it probably is.
"A lot of damage goes unseen," he says."There can be cracks in the frame or damage to airbags."
Finding Car Insurance for a Totaled Vehicle
Ward says you may run into trouble when you seek auto insurance for a car that has been declared totaled. Your ability to buy collision and comprehensive coverage may be affected.
"That is really up to each individual company,” he says. Before you decide to fix your car, check to see if that is an issue." Some insurers will not accept a car with "a branded title," he adds. "It basically puts a stamp on it that says it is a salvaged vehicle."
Ward notes that the federal government has established a database called the National Motor Vehicles Title Information System to provide information to car shoppers. "All total losses are recorded by the insurance companies. What this does is provide consumers with a database to see if a car has been previously salvaged." That means don't count on being able to unload your vehicle on a buyer.
Is Repairing a Totaled Car Worth the Effort?
Only you can decide whether repairing your totaled car is worthwhile.
The best thing is to be well informed,” says Ward. “Talk to your mechanic. Do your research. Make sure you know what you are getting yourself into."
Young has seen more and more drivers deciding to repair and keep their 'totaled' vehicles.
"People don't want to go down the road of having a $500 per month car payment anymore" because of the tight economy, says Young. "Cosmetically it may not look as good as it did before, but they are not going into debt for a new car purchase."