Car Wrecked? You May Not Want it 'Totaled'

Recently, many people affected by Superstorm Sandy had extensive water damage to their cars and were faced with car insurance claims in the thousands of dollars. While it may seem as if the best-case scenario is to have the auto insurance company deem the car a total loss and write a check, it actually may not be the smartest choice for those who own older cars.

When you experience major damage to an older car, whether it is from a natural disaster, such as Superstorm Sandy, or a car accident, it's easy for your insurance claim to be near or higher than the car's value. But you may not want to push for a total loss to take out a car loan to buy a new car.

The average age of the cars in the U.S. today is 10.8 years and has been steadily climbing according to R. L. Polk & Co., an automotive data company. Most people are not anxious to replace their cars with newer models. As a result, if their cars are in good shape and well-maintained, it makes the cars worth a lot more to their current owners than the actual dollar value of the car itself. After all, if you haven't had a car payment for five years, do you want to start now?

As long as you have full coverage on your car insurance, your auto insurer will pay for the complete repairs on your car, even if the final amount exceeds the car's value. It's up to the insurance company adjuster to calculate the cost of the damage and to decide if it exceeds the car's value, but this happens before the repairs start. So for a car that is a borderline total, you may want to advocate for the repairs.

Even with extensive repairs to the body or to fix mechanical or electrical problems, it's possible to have a car returned to the same condition before the damage. If more issues appear later that are related to the damage, which is often the case with flooded cars, the insurance company will be required to reopen the claim and complete the repairs.

If you own a car with damage close to its value, first calculate the car's value at car-pricing sites -- such as Edmunds.com, Kelley Blue Book and NADAGuides.com -- and print out a copy of each estimate. With this information, if your car insurance company offers you a payout, you can use the highest value to ensure the payout is fair or, if it's lower, make the argument for either a higher payout or your car to be repaired.

If you decide to move forward with the repairs, keep in mind that you may be without your car for an extended period and that you may have repeated visits to a body shop, mechanic or dealer to work out any remaining bugs associated with the repairs. Even with these extra headaches, it may be well worth the effort to avoid getting a small auto insurance payout and having to take out a car loan.

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If you have a car question, email it to us at Driving for Dollars. Read more Driving for Dollars columns and Bankrate auto stories. Follow her on Facebook here or on Twitter @SheDrives.

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