How Are Totaled, Damaged and Salvage Cars Valued?

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As soon as you drive your car off the showroom lot it starts to lose its value and its replacement value is more important than the purchase price. It is a good idea to know the replacement value of your car. This value changes over time and depends on many other factors. In the event of a collision when you file a claim you must have a fair idea of your vehicle’s replacement value. In a total loss claim case, it is vital that you have an understanding of your car’s replacement value as that is your settlement amount. Or, even if you were to decide on the coverage level for your car, you need to know how much is your car’s current worth.

The actual cash value of your car is higher for new cars in comparison to older cars. As per IBC, some insurers may give you a full replacement value when your car is beyond repair and not more than 2 years old, with a waiver of depreciation. Other insurers may offer you a claim settlement to pay for a similar car as per your current car profile. Each insurer varies in how they may deal with you on a total loss claim. It is important that you read between the lines on your contract to know what to expect in such a situation and get a fair deal.

What Does Totaled Vehicle Mean?

The meaning of totaled vehicle is the same as a vehicle that is a total loss. This means the repair costs are more than the value of the vehicle. So, if you had to repair a car by spending $5000 that is worth $4000 then it is a total loss. This varies as per each insurance company. In such a situation when you file a claim then your insurer would assess the damages. If it costs more to repair then they may total your car. When your car is a totaled vehicle your insurance company refuses to repair it and may offer you a settlement amount for a replacement car.

Are Cars Totaled When Airbags Deploy?

Most often when an airbag deploys it could be either from malfunctioning as a manufacturer defect or it could be due to an unsafe vehicle situation. But each time the airbag deploys it does not mean that could total your car and that decision is specific to your insurer and your circumstance. When the airbag deploys and the cost of repairing it and other front area damages is more than the worth of the car then your insurer may total your car. This means that your insurer considers it is not worth repairing your vehicle due to the high cost of fixing it. Installing new airbags can be pretty expensive. So, it is up to your insurance company to decide whether an airbag deployment could be a total loss of your vehicle or not as per your contract.

My Vehicle Is Totaled Now What

totaled car

After a stressful accident that leaves your car damaged to the extent of a total loss you could be wondering what to do. You may be cautious to reduce the effects of such a write-off and claim settlement as follows:

  • When you file your auto claim you may ensure that the appraisal does not leave out any upgrades or changes. These could add to your car’s original value to increase its worth. These may include expensive stereo unit, heated seats, modified engine, customized wheels etc. Show your insurer the receipts for all the upgrades and purchase of accessories for your car.
  • Get an idea of how much your car is worth as per its features, age, condition and mileage driven before the collision. Your research would help you to negotiate with your insurer during your claim.
  • If the insurance company offers a settlement far less than your estimate then you may ask for a second appraisal. You may even hire your own appraiser if your insurer allows you. But you may have to pay the appraiser a portion of the appraisal cost.
  • Check with your insurance company whether they could factor in the administrative costs of replacing your vehicle; such as taxes and registration. The point here is that these expenses arise since now you need to replace your car and should be included in your claim settlement. It depends on your insurer how they may look at this claim situation.
  • Your car insurer may salvage your vehicle and pay you the actual value of your car before the accident less your deductible. If your policy had a depreciation waiver then you may get a full replacement value for a new car.

How Are Totaled Cars Valued?

An insurance company could determine a car as a total loss when it costs more to repair it to restore it to its previous condition than its actual worth. Other costs that may also play a role in this calculation. These include storage fees, replacement rental car if applicable and salvage. Insurance companies have their thresholds usually around 70% to 80% of the retail value of the car as the maximum repair amount. So, if you file a claim for your 2003 Honda Accord valued at $4000 that costs $2700 to repair, it could be a total loss. Whereas, if a newer Mercedes car was damaged then your insurer could still consider it worthy of repair.

Can Totaled Cars Be Fixed Or Repaired?

When your totaled car is damaged mostly cosmetic, such as some dents, then it could be possible to fix it. This decision may depend on how much you are willing to spend to repair it. A totaled car means that it has damage that has reduced its value by 70% to 80% in the market. So, the expenses and trouble to get your car repaired and rebranded may not justify its current worth.

Where Do Totaled Cars Go?

When an insurance company totals a car these are mostly not drivable. The insurer may keep an auction and salvage yards may bid for the total loss car. Insurance companies sell these cars to a local salvage yard that tows it off after winning the bid. The insurance companies conduct the salvage sale and solicit bids on their own responsibility as per their company rules.

Can You Buy Totaled Cars From Insurance Companies?

Sometimes your insurer may declare your car a total loss and let you keep it as per their provisions. In such a case usually, the insurer may deduct their payment from salvage and then settle the claim. They may estimate the salvage value for a high amount that could leave very less for settling your claim. This means that it is better to let the insurance company keep the vehicle as salvage. Most provinces have very strict rules when you try to restore a total loss car. And it is a different story altogether to get insurance and drive it on the road. So, more often car owners do not buy totaled cars from insurance companies as those cars are irreparable. You may not drive them in Ontario as salvage and these cars are only good for its parts if any.

Once a car has a ‘salvage’ brand then you may not drive them. But you may tow your car to get a safety standard certification or for a repair. After you get a ‘rebuilt’ brand certification with safety and structural inspection of the salvaged vehicle you may drive it on the roads.


Resources:

http://www.ibc.ca/on/auto/crisis-management/repairs-and-replacement


 

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